Catherine Denoon-Stevens | Head | Product Incubation | Mukuru | mail me |
Is cash truly dead? Fintech innovations and digital payment solutions have risen rapidly, prompting many to think so. Yet, cash remains alive. Cash is still the preferred way to transact for millions, especially in Africa.
Fintech companies constantly innovate to serve the underserved and unbanked. This tempts some to declare cash obsolete. However, fintechs embedded in Africa and emerging markets know cash remains vital. It is still widely used and, in many cases, the primary form of tender.
Bridging the gap between cash and digital payments
Rather than hinder fintech growth, this reality presents a compelling opportunity for innovation.
By listening to customers, fintechs can offer products at the right time. They must also provide these products on the right platform to meet needs effectively. Fintechs can bridge the gap between cash and digital payments by offering choice. They can also support customers’ digital journey as they transition from cash to digital options.
Designing effective products starts with understanding the market. In South Africa, around 20 million adults prefer cash transactions. This includes banked individuals who still favour cash for day-to-day transactions. Despite 80% of South Africans having bank accounts, cash dominates payment methods.
The FinScope study reveals that 94% of adults withdraw cash monthly. Statista notes that 73% of South African point-of-sale transactions still use cash. Additionally, the informal economy, worth R600 – R750 billion, relies heavily on cash transactions. These statistics confirm that cash plays a central role for millions of South Africans.
As digitisation grows, an important question arises. Should cash-bound consumers be excluded from the digital economy? We strongly believes they should not.
Cash is still preferred for control or necessity
Fintechs must serve customers in ways that suit their preferences. This includes offering both cash and digital payment options. Access alone does not guarantee digital adoption. Preferences and circumstances often vary among individuals. Some banked individuals still prefer cash for control or necessity. This is true even for those who receive payments digitally.
Fintechs must ensure customers can use their preferred payment methods. These methods may include cash, digital, or a combination of both. Even digitally savvy consumers sometimes require cash. Informal markets and events often operate without digital payment options. This highlights the ongoing relevance of cash transactions. As such, cash is not truly dead.
Forcing a digital-only approach on underserved communities fails to reflect real-world needs. Trust is critical in easing customers into the digital economy. Older generations may distrust digital transactions. Fraud targeting vulnerable groups worsens this distrust.
Cash remains essential for financial inclusion
Offering cash options builds trust and security among customers. Without trust, even innovative products will fail to gain traction. We recognise the trend toward digitisation. It continues to develop products that focus on customer needs and offer choice.
Over half of our remittance payments are in cash. Digital adoption is growing but has not yet surpassed cash transactions. Through partnerships like Payfast, we enable cash-based e-commerce transactions. This connects cash users to the digital economy.
Despite rapid digitisation, cash is not truly dead. Cash remains essential for financial inclusion. Fintechs must offer solutions that blend physical and digital access. These solutions must meet the diverse needs of customers. The journey to full digitisation requires trust and choice. This ensures no one is left behind in the transition.
