Cash is king
Almost everyone has heard the phrase “Cash is king”. Cash, when compared to its modern counterparts, retains that sentiment, especially in developing countries with large unbanked and underbanked markets. Various studies and overall cash flow analysis have found that the prevalence of cash has a number of disadvantages – for one, cash costs the South African economy R88bn per year.
Conversely, digitising the financial ecosystem has a number of benefits: it gives citizens financial options by gaining a financial history, allows accurate taxation, and improves financial responsibility and education holistically.
Digital payment mechanisms
Digital options include electronic fund transfers, credit and debit cards, and “instant payments” between banks. These mechanisms rely on a multitude of complex systems for banks and other financial institutes to communicate with each other. This has made many payment mechanisms expensive, slow, and fragile. Additionally, hidden fees often associated with digital payments create a barrier for digital payment adoption, and a large portion of the country’s small and medium enterprises still primarily only accept cash.
PayShap as an alternative to cash
SARB’s introduction of Payshap aims to change this. The new payment system aims to facilitate more diverse, safer, and faster payment options across banks and financial institutions. Accessed through mobile and internet banking at participating banks, PayShap provides an instant digital alternative to cash that is supposedly safe and convenient. While the fees associated with PayShap are still unconvincingly high, the potential of PayShap creates a compelling alternative to cash.
What will it take to successfully digitise the economy?
In our newest publication we explore what the future of payments looks like for South Africa. What can smart phones offer to accelerate the adoption of digital payments? What can we learn from global markets? And what does industry need to succeed in digitising the economy?
Read more by downloading the publication below.