The world may be moving towards a cashless retail environment – and South Africa following suit, but there is doubt over whether hard cash will ever really be dead in this country.
Local retailer Woolworths made waves on social media this week after announcing that its WCafé would go cashless for the safety of its customers, but many of these customers appear to be vehemently against the idea.
Some stated that they would no longer frequent the café, nor would they support any other retail or hospitality outlet that stopped accepting physical money.
In addition to WCafé going this route, the Shoprite Group last year launched 10 cashless outlets – nine Uniq clothing stores and one OK Urban store. However, some experts believe that cash retail is king in South Africa.
“The cash economy in South Africa cannot be underestimated,” states Galetti Commercial Real Estate chief executive John Jack.
“Township and rural malls continue their upward trajectory and keen investors are taking note.”
Galetti has continued to enjoy favourable demand at auctions for cash retail properties.
“These flagship properties attract high volumes of foot traffic and data shows that there’s a vast amount of cash circulating in these markets – despite the current climate.”
Furthermore, South Africa’s informal economy runs on cash only, with the majority of informal traders not even owning bank accounts.
However, despite a social and economic backdrop of inequality and weak economic growth, Diana Bresendale, a graduate of the University of Stellenbosch Business School, believes that South Africa will achieve a cashless society by 2030, thanks to recent planning and execution methods by the Payments Association of South Africa.
Discovery Bank and Visa’s Spend Trend 2023 report states that the Covid-19 pandemic and associated lockdowns had a significant impact on consumer spending patterns across both the world and South Africa. It has changed how much people spend, what they spend on, and how they spend.
“South Africa has an incredibly sophisticated payment infrastructure, and we expect contactless payments to dominate as consumers get more comfortable using them. We also expect digital payment wallets to expand as capable smart devices become ubiquitous.
“However, older consumers likely require more familiarity and trust to adopt these purchasing habits. This can be encouraged through education focused on the security and convenience of these payment methods.”
Spending habits during the Black Friday period also showed an increase in the use of digital payments in South Africa, although this uptake is lagging that in many other countries.
MarketResearch.com, a provider of industry intelligence for businesses, consultants, and investors, notes that, globally, the landscape of commerce has undergone a radical transformation through the integration of technology. This has revolutionised both online and offline purchasing channels.
“As traditional in-store commerce gradually regains its momentum, the dependence on physical currency has waned, making way for the surge in digital payment solutions like tap-to-pay, smartphone payments, and contactless transactions.”
Its yStats.com report, Global POS Payment Methods 2023, reveals that this shift has not only prompted retailers to revamp their point-of-sale (POS) systems but prompted the rise of soft POS and smart POS systems, streamlining efficiency and saving valuable time during in-store shopping experiences.
“The wave of digital payment methods has redefined the checkout experience, rendering cash and card transactions passé. As of April 2022, more than half of surveyed consumers indicated reduced cash usage, with over a third gravitating towards contactless payments and digital wallets for their offline purchases. This shift isn't confined to traditional retail alone; even sectors like gas stations, restaurants, clothing stores, and takeout establishments are embracing contactless payments.”
It adds that the move towards specific retailer-specific mobile apps has surged, with around two-thirds of consumers utilising these apps primarily for in-store contactless payments in 2023. This is a six percent increase from the previous year. Tap-to-pay features launched by tech giants like Apple and Google are also gaining traction, the report reveals.
“In summary, the global shift towards modern payment methods is reshaping the retail landscape. Contactless options such as scan-and-go, self-checkouts, QR code payments, digital wallets, and contactless cards are becoming the norm.”
IOL Business