Cash usage costs SA consumers R23bn

HIGH levels of cash usage in the South African economy are estimated to have cost consumers R23-billion in 2015, with low-income consumers worst affected, a Mastercard study shows.

Low-income earners forfeit 4% of their earnings on the costs of handling cash, compared to the national average of 1.1%, Mastercard said at the World Economic Forum on Africa in Durban.

Direct costs associated with cash, such as ATM and bank branch fees, cost consumers R9.1-billion in 2015. The remaining R14-billion (61%) comprised indirect costs, such as travel time and travel expenses associated with accessing ATMs and branches, interest foregone and theft.

While the number of banked adults increased from 63% of the adult population in 2011 to 77% in 2015, cash transactions accounted for more than half the total value of all consumer transactions in 2015., or about R1.3-trillion.

Those earning belowR3 000 a month had the highest incidence of ATM withdrawals, behind social grant recipients.

With ATMs and branches accounting for 85% of consumers’ cost of cash, a broader acceptance of cards among small merchants, particularly in the informal economy, would help drive better transactional behaviour, said Mark Elliott, head of Mastercard SA.

Tax incentives and alternative payment channels, such as mobile payments, could increase the acceptance of non-cash payments among merchants, Elliott said. Educating consumers around the cost of cash was also important.

Genesis Analytics did the study, using data from banks, FinScope and Statistics SA. — TMG