InAs the economic centre of South Africa's vibrant town, valued at an estimated R75 billion, there is a transformational change. As cashless trading adoption grows, small businesses are thriving. Despite the widespread availability of banking services, cash remains dominant, and cooperation between private and public stakeholders is essential to address awareness, reduce costs and increase the ingestion of digital payment solutions.
According to a Statista survey, eight out of 10 South African adults have bank accounts, but 73% of POS transactions are still in cash, underscoring the need for a major push towards digital payments. Cash reliance is particularly pronounced in the economy of a vibrant town run by over 1.8 million informal traders.
This preference is driven by several factors. Cash inclusiveness allows everyone to participate in the economy regardless of their financial situation, but physical currency also offers immediacy and ease of use.
Digital payments can increase security by reducing cash-related risks while providing greater convenience through faster trading and 24/7 accessibility. In addition to providing merchants with a layer of financial transparency, digital transactions and payment history helps these informal companies build transaction profiles, making it easier for them to access loans and financial services. This can promote economic growth by supporting local entrepreneurs and fostering safer societies.
What should I do?
However, private and public sector stakeholders need to take several steps to promote the adoption and use of cashless transactions between informal businesses.
Address Cost and Recognition Issues
Developing affordable digital payment solutions and launching educational campaigns can help to dispel misconceptions about digital payments. Improving financial and digital literacy through training programs and community outreach is also essential to ensuring that all segments of the population can benefit from digital payment systems.
Enhance your digital infrastructure
Modernised payment systems to expand coverage of internet and mobile networks, particularly in underserved regions, and to support real-time, low-cost transactions, make digital payments more attractive and accessible. Building trust in digital payments is equally important. Ensuring robust security measures and promoting digital payment fees and transparency in processes can help build trust among users.
Regulatory support and incentives
Creating a supportive regulatory environment for adopting digital payments and providing incentives for businesses to adopt digital payment methods will encourage the transition to a cashless society. The Reserve Bank of South Africa (SARB) is busy with digital payment strategies to promote digital payments more widely across the country, but township costs-sensitive consumers will continue to rely on cash until certain regulatory costs (such as interchanges and other banking fees) are addressed.
collaboration
Finally, facilitating collaboration between governments, financial institutions, technology providers and community organizations is essential for the development and implementation of comprehensive digital payment solutions.
Gain momentum
Despite cash control, the shift to digital payments has gained momentum from small to microbusinesses. Companies such as Yoco, Shop2shop, Flash and Ikhokha are at the forefront of this revolution.
Traditionally, people living in town had to take taxis or buses to the nearest mall to withdraw cash. Now, thanks to the widespread availability of these card payment options at local community stores, residents can purchase items directly from nearby shops. This not only supports small entrepreneurs, but also saves customers money on transportation costs.
The convenience of cashless trading has led to a prominent boom in the informal economy. More and more people in townships and informal areas prefer to spend small amounts at local stores rather than withdrawing large amounts of cash. This trend, accelerated by the Covid-19 pandemic, has made shopping safer and more convenient, reducing the need to queue at malls and ATMs.
The success of cashless payments has also benefited banks such as Capitec and Tymebank. As more customers use their cards for transactions, banks are focusing on reducing ATM costs and strengthening their digital payment infrastructure. This shift supports the broader goal of financial inclusion and enables all South Africans to participate in the digital economy.
It appears to be Shop2Shop ahead of this cashless transformation curve, with its innovative solutions and agile methods having a major impact on small and medium-sized businesses, informal economy. To further support Cashless Transactions, companies like Shop2shop offer digital vouchers that can be used for payments. Their efforts highlight the potential for a broader transition to a digital society, which further reduces the risk and costs of processing cash.
A completely cashless society is not necessarily the ultimate goal, but these measures can help South Africa make great strides in creating more inclusive opportunities for small and microbusiness, the lifeblood of the economy. Furthermore, it bridges the gap between informal and formal markets that stimulate domestic economic growth.
About shop2shop
The Shop2shop platform offers accessible end-to-end technology solutions designed to empower entrepreneurs and their stakeholders by encouraging seamless payments. Our mission is to help businesses thrive in the digital economy by removing barriers to growth. From payment devices that accept card payments to free, immediate payments between stores and suppliers within the ecosystem. Shop2shop offers payment solutions that give customers instant access to financial transactions, driving a comprehensive economy that connects key brands with small, informal stores.
