‘Globally, non-bank entities are driving the future of payments. In just more than a decade, non-bank and fintech disruptors have gained substantial market share, transforming the industry.’ These were comments from Lincoln Mali, CEO of payment group Lesaka and president of the Association of South African Payment Providers (ASAPP), at the launch of the organisation in Johannesburg earlier this year.

The ASAPP’s founding members consist of eight of the country’s largest non-bank digital payment providers – Altron, Hello Group, iKhokha, Lesaka, Network International/ Payfast by Network, Peach Payments, Shop2Shop and Yoco.

‘The cost of transactions is prohibitive to the small business and to the consumer, and that’s why they end up using cash, because the alternatives look expensive and the alternatives don’t look viable. What we need to do is to show viable alternatives to cash,’ says Mali.

It seems cash is still, as the old cliché has it, king on the continent.

Research by Statista reveals that eight out of 10 South African adults have a bank account, but 73% of point-of-sale transactions are still conducted in cash.

A survey by Stitch found that ‘cash continues to maintain its stronghold, even as consumers are starting to dip their toes into digital payments for certain purchases. For those who still use this method frequently, many indicated access to digital options still presents a barrier. Others indicated the convenience of cash, lack of associated fees and ability to manage personal spending outweigh the benefits of digital methods in many cases – coupled with continued security concerns. More education and incentives to try digital methods for particular purchase decisions remain necessary to move more transactions into the digital space’. A signifi- cant proportion of consumers still indicated cash as a preferred method, for online and in-store purchases.

‘We see cash as being the most dominant form of payment for many consumers, micro-merchants and small businesses in townships, villages and city centres across the country,’ says Mali. ‘This is not sustainable. We need to digitise our economy. We need to open up our payment system, make it more modern and inclusive, so that more merchants, small businesses and consumers can participate in a modern payment environment.’ The reliance on cash is particularly evident in the country’s township economy, where more than 1.8 million informal traders operate, according to a Stats SA report.

‘Small, informal businesses are the backbone of South Africa’s economy, yet many operate outside the traditional financial system, lacking access to digital payments, affordable banking or reliable credit. Many informal businesses cannot accept card or digital payments due to high infrastructure or banking requirements. The need for inclusive, affordable and accessible financial tools is more urgent than ever,’ Kagiso Mothibi, CEO of fintech at MTN South Africa, told JSE magazine earlier this year.

MTN has launched MoMo, a mobile money platform aimed at digitising payments and enhancing financial inclusion. With MoMo, merchants can receive instant payments using QR codes, merchant IDs or payment requests, all at a low transaction fee of 0.5%. In addition to accepting payments, merchants can expand their income streams by offering a range of value-added services through the MoMo app. These include selling airtime, mobile data, prepaid electricity, DStv subscriptions, Lotto entries, bus tickets and more – earning a commission on each transaction. This multifunctional platform empowers merchants to manage payments and generate additional revenue in one integrated solution.

‘Over the next 3–5 years, we can expect to drive mass financial inclusion by digitising even the smallest businesses. Micro entrepreneurs will not only accept payments, but we can help them become service hubs, earning commissions and building local trust. Our digital ecosystem is growing as usage expands, new products like microloans, savings and insurance can be layered in, creating a full digital finance experience and opportunities for these small merchants. Empowered merchants mean stronger local economies, job creation and a more dynamic informal sector,’ Mothibi told the magazine.

As consumer behaviour shifts rapidly across the globe, South Africa – along with the rest of the continent – is experiencing similar trends. As smartphone ownership grows and digital literacy improves, more consumers are embracing digital transactions through banking apps, mobile wallets and platforms such as SnapScan and Zapper. For informal businesses, accepting digital payments allows them to align with customer preferences. It also encourages greater spending, as customers are no longer limited by the amount of cash they carry, leading to increased transaction volumes and higher profitability.

Adopting cashless payment systems also strengthens the resilience of informal businesses. Once they are equipped with digital payment tools, they can explore additional technologies. These tools empower township businesses to innovate, stand out and expand their reach.

‘In the informal sector, for example, trade activity can be supported by visionary fintech solutions and complementary products and services that help spaza shops source effectively, reach their customers and grow,’ says Sheetal Patel, retail management consulting principal director of Accenture in Africa, who headed a study by the company that analysed the informal supply chain of spaza stores across Gauteng and the Western Cape.

‘Banks, telecommunications companies, retailers and CPG [consumer packaged goods] suppliers are all scrambling for a share of the pie. Non-traditional players like fintech are rising and offering informal business owners safe and convenient payment solutions. Yoco and iKhoka, for example, offer easy-to-set-up point-of-sale devices that can be operated through a cellphone, using the signal of the user’s mobile network, or built-in 4G cards that provide uncapped internet access. The entire onboarding experience is paperless, remote and at minimal cost to the vendor. This technology is simple, scalable and safe.

‘Research reveals that South Africans, particularly in the informal sector, believe banks overcharge on transaction costs, offer little protection against scams, and money takes too long to clear on the trader’s side – affecting cash flow. With the development and introduction of digital payments, more and more traders are using an array of new digital payment facilities to make payments for stock bought from suppliers. Traders have also introduced other options for shoppers to pay for groceries at the spaza shop. These digital facilities also offer value-added services for shoppers to purchase at their convenience, for example, airtime/data, electricity, water, money transfer and Lotto tickets.’

According to a report by IOL, the South African card payments market ‘is on a remarkable upward trajectory, with pro-jections indicating it will reach ZAR2.9 trillion by 2025. This growth is fuelled by a growing preference for digital payments, increased financial inclusion, and a rapidly evolving payment infrastructure that appeals to consumers seeking speed, safety and convenience in their everyday transactions’.

Quoting a study from GlobalData, it says the total value of card payments in South Africa registered a growth rate of 10.3% in 2024, hitting ZAR2.7 trillion. IOL says this was mostly ‘driven by higher consumer spending and an expanding acceptance of card payments among merchants, underscoring a shift in the financial habits of South Africans’.

Yasaswini Pujitha, banking and payments analyst at GlobalData, was quoted as saying that the local payment ‘landscape is evolving rapidly, supported by a growing banking population, increasing adoption of contactless payments, and the development of payment infrastructure’.

Pujitha says the average frequency in South Africa in 2024 of payments per card was 118.1. This is much higher than many other countries such as Nigeria (51), Egypt (24.2), Morocco (10.9) and Kenya (5.3).

Debit card transactions accounted for 74% of the total card payments market by value in 2024.

A slew of digital banks and fintech companies are innovating the traditional banking sector, introducing new products and services, leading to a boost of contactless payment solutions.

GlobalData says 68.4% of respondents in South Africa reported having access to a contactless card.

‘South Africa’s payment card landscape is set for steady growth over the next five years, marked by increased adoption of payment cards amid a broader digital transformation,’ according to Pujitha. ‘The proliferation of digital banks, a growing preference for contactless technology and improving payment infrastructures will be the key drivers for this growth. The market is expected to grow at a compound annual growth rate of 6.7% between 2025 and 2029, reaching ZAR3.8 trillion by 2029.

‘The challenge with the uptake of cashless payment methods will be addressing perceptions, especially around cost, to induce a natural gravitation towards cashless payment methods.’

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