WHY the majority of South Africans prefer cash in hand … still

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Despite the sharp digitsation of banking, the majority of South Africans prefer cash transactions. New data suggests that digital transactions may be on the rise for wealthier residents/businesses, but the majority of South Africans prefer cash in hand.

Impressively, even with the rise in digital banking, cash transactions have not decreased over the last decade. As a result, the lower-income majority in South Africa still prefer dealing in hard currency.

SOUTH AFRICANS PREFER CASH

Many informal traders and spaza shops are simply unable to transact digitally. Image: File

As interesting as it sounds, the fact that most South Africans still prefer cash is rather a large issue for the SA Reserve Bank (SARB). According to the latest insights, this trend suggests that most residents simply don’t trust banking institutions.

Moreover, because nearly 45% of South Africans receive some form of SASSA grant, many want to keep additional income undisclosed, or ‘off the books.’ Likewise, the sentiment seems to be that money recorded in a bank account may draw attention from SARS.

CASH OR CARD ONLY?

A key reason why many low-income residents draw their money immediately is so it remains undisclosed to SASSA. Image: File

However, there is also a strange divergence occurring at a retail level in South Africa. Because, in middle- to high-income areas many merchants are going cashless. While, in the informal economy, many shops shun card transactions. This means there is a large amount of cash circulating South Africa. Far higher than other comparable emerging economies.

Standard Bank’s Nthabiseng Mohale revealed broadly the same amount of currency has been circulating the country since 2009 – roughly R171 billion. Therefore, “Cash remains deeply embedded in the country’s consumer psyche,” said Mohale.

Informal saving ‘stokvels’ is another reason why South Africans prefer cash in hand. Image: File

Furthermore, the SARB says broadly half of all adults withdraw all their salary money as soon as it is deposited in their accounts. Conversely, digital payments in South Africa have enjoyed an 8% increase annually. This represents a clear value proposition to retailers and consumers who don’t wish to handle money, too.

Nevertheless, the majority of South Africans prefer cash because it represents a tangible, familiar way of managing one’s finances. Many are wary of hidden fees or unauthorised/bounced debit orders. Likewise, cash is also perceived as a safeguard against unforeseen financial burdens. Which side of the fence do you sit?