About 60% of South Africans use cash for daily purchases, but the Reserve Bank wants to shift these to digital payments to boost small businesses and create equity.
Payments ecosystem modernisation (PEM) head Pradeep Maharaj says people are missing out on the benefits of digitalisation. He says the Bank is drawing on examples from India, Brazil, Thailand and Australia to help facilitate the process.
In 2024 the Bank published a roadmap centred on a national payments utility to operate and manage digital payment structures. The plan aims to make payments cheaper and faster, as well as to open up to fintechs and other businesses.
The Bank will consult the National Treasury, government departments and agencies, municipalities, the payments industry, fintechs, mobile money operators and consumers. Businesses will get lower fees, instant payments instead of cash, and simple acceptance tools (QR codes, phone apps). Interoperability across providers and digital IDs will simplify sign-up, reduce fraud and cut paperwork.
The roadmap targets small businesses, including street vendors, who face robbery, fake currency and costly bank trips. A lack of change and no sales records cost revenue and block access to loans. Studies show that most South Africans have bank accounts but often withdraw cash on payday.
Cash costs a lot more to access and use than digital, and yet people still rely on it
— Pradeep Maharaj
“Our modernisation programme,” says Maharaj, “is to look at a fundamentally different way to ensure that we can leverage the foundations of the sophistication that we have, but do it in a way that really addresses those who rely on cash. It is far-reaching; it is quite bold and quite radical.” He tells the FM that the Bank has taken a 50% stake in PayInc to drive the system.
A September 2024 payments study found that cash remains common for low-value transactions, while cards and digital methods dominate higher-value payments. Payment digitalisation is progressing: this month Apple launched Tap to Pay on iPhone locally, partnering with payment platforms and app developers — though these options are not yet universally accessible.
Maharaj cites cost, infrastructure and trust in financial institutions as barriers for acceptance. “Cash costs a lot more to access and use than digital, and yet people still rely on it.”
He argues that digital payments boost social development and economic growth, and that PEM will give everyone equal access. “I want a small business, a microbusiness, even if it’s a street vendor, to have that same opportunity and start to access other financial products, small loans and so forth, so they can grow their business and one day move from being a roadside vendor to owning a shop and go up the value chain.
“We’re designing the minimal infrastructure to help everyone connect, whether it’s a bank, a fintech or a retailer that will provide the service to the customer.”
Maharaj says South Africa has long led payments innovation — its real-time settlements system is 28 years old and still world-class — but must work hard to remain a leader.
He adds that there is wide agreement on PEM’s pillars and a focus on implementation. Over the next few years the digital financial ID should become a payments cornerstone, and nonbank providers should be able to offer services alongside traditional banks.
The system, including the digital financial ID, should have full basic functionality towards the end of next year.
Maharaj has worked at the Bank for 14 years and previously led the Gauteng treasury.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.