R23-billion cost of cash in SA is carried by low earners

A new Mastercard study, which was released on 4 May 2017 at the World Economic Forum on Africa in Durban, reveals that using cash cost consumers R23-billion or 0.52 percent of the country’s Gross Domestic Product in 2015. These costs are disproportionately carried by low-income earners, serving as a major barrier to financial inclusion.

Although the number of banked adults has increased from 63 percent in 2011 to 77 percent in 2015, cash transactions still account for more than 50 percent of the total value of all consumer transactions. This suggests that being formally banked may not be enough of a driver for consumers to move away from cash.

“Adoption of products is an important first step for financial inclusion, but usage is equally important,” says Mark Elliott, division president of Mastercard, Southern Africa. “From the consumer’s perspective, the perceived benefit of using cash is largely driven by the misconception that cash is cheap. While South Africans are generally aware of the direct fees associated with accessing cash such as bank transaction fees, they do not consider the indirect costs such as travelling to cash-in and cash-out points, the often billable time lost spent accessing cash, as well as the risk of theft.”

Conducted by Genesis Analytics, the Mastercard Cost of Cash for Consumers in South Africa Study measures both the direct costs of cash (ATM, branch costs and cash-back at Point of Sale) and indirect costs of cash (travel costs, time-related costs, foregone interest and theft) for consumers across low, middle and upper-income segments, taking into account the different behaviours and preferences of each group.

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