In recent years, there has been a gradual shift towards going cashless. This is something that is impacting every society around the world. However, in developing countries like South Africa, this transition has become a layered one. Influenced by the divide that separates people when it comes to access to both technology and financial services, the need for inclusive digital transformation is essential.
Even though South Africa has a large segment of the market that is unbanked and underserved, research has shown that 95% of people have executed at least one digital payment. This signifies the massive potential of going cashless. Retailers like Woolworths Café and Starbucks have already gone cashless at some of their outlets. Despite the general uproar surrounding this, the retailers have done so based on data analysis that reflects their customers’ preferences for doing so. Regardless, this is a bold move, demonstrating a commitment to a more digitally-driven future that reflects the convenience of cashless.
Multiple benefits
But more than simply providing a better experience, cashless helps reduce the administrative burden, the cost of and security risks associated with handling cash. Cash management is fraught with challenges, from the logistics of handling physical money to the dangers posed by cash-in-transit heists – something that has become very prevalent in South Africa.
No matter the reason, education plays a critical part in the transition to cashless. This requires changing people’s mindsets and alleviating any fears they may have when it comes to digital transactions. For instance, people must understand the benefits of carrying a single card instead of cash, and the simplicity and security it brings. This does not even reflect alternative payment methods such as accepting payment on SoftPOS device on a smartphone or making payment with other solutions like digital wallets and QR cods.
Addressing concerns
Another often-cited concern when it comes to going cashless is the infrastructure required to do so. However, the costs and risks associated with maintaining a cash-based system are arguably higher. The key to a successful transition lies in ensuring that South Africans have some form of relationship with a financial institution. This can be one of the traditional banks or a fintech such as any one of the several digital banks that have launched in recent years. But once the relationship is in place, much of the required infrastructure to go cashless is already there.
Tax is another concern for those hesitant to go cashless. While cash transactions can sometimes allow merchants to avoid tax, digital transactions make it much harder to avoid tax obligations. This brings more transparency and fairness to the economic system. If people are concerned with ‘government monitoring their transactions’, then chances are those transactions might not all be above board.
When it comes to true digital transformation to embrace the cashless journey, it comes down to creating a more empowered future for everyone. It does not mean completely abandoning cash. Rather, it entails educating people on the digital platforms and solutions available to them.
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