Consider costs of using cash

USING cash to pay for goods and services is a costly and unsafe way of transacting, yet many South Africans are still doing it most of the time. At the World Economic Forum on Africa, being held in Durban, Mastercard released the Cost of Cash for Consumers in South Africa Study, which estimated the costs of using cash in 2015 at R23 billion.

Low-income earners carry the highest costs of cash, forfeiting four percent of their earnings compared with the national average of 1.1 percent.

Despite an increase in the number of banked adults, from 63 percent in 2011 to 77 percent in 2015, cash transactions still account for more than half of the total value of all consumer transactions, the study found. 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,” Mark Elliott, division president of Mastercard, Southern Africa, says. “The perceived benefit of using cash is driven by the misconception that cash is cheap. While South Africans are generally aware of the 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 risk of theft.” – Staff Reporter