The High Cost of Cash: Why cash usage costs our economy R30 billion a year
August 1, 2025
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South Africa’s payments landscape has evolved rapidly over the last decade. Today, consumers and businesses have access to a growing range of digital payment options, from debit and credit cards and mobile wallets to Pay by bank and QR code-based solutions. Yet, despite growing adoption of digital payments, cash remains the dominant payment method in South Africa, particularly in informal and rural areas, according to the South African Reserve Bank’s 2023 Payments Study.
This reliance on cash carries a significant economic burden. According to the Payments Association of South Africa’s (PASA) integrated report, released in June 2025, cash use costs the South African economy approximately R30 billion annually to facilitate and secure its circulation. So why does cash still reign supreme, and what can be done to shift towards more efficient, inclusive digital payment systems?
The True Cost of Cash in South Africa
Cash may appear convenient, but its hidden costs are substantial and widespread. Before it reaches consumers, cash must be printed, stored, insured, transported, and distributed. All of this comes at a price:
- Transport and Security: Moving money across the country requires armed cash-in-transit (CIT) vehicles operating under strict security protocols. This is a major cost centre for banks and retailers.
- Storage and Insurance: When not in use, cash is stored in high-security vaults, often at South African Reserve Bank (SARB) facilities, and must be insured against theft, hijacking, and damage.
- Retail and ATM Costs: Distributing cash via ATMs or tills requires constant replenishment and reconciliation. Retailers bear the operational and risk-related costs, which are ultimately passed down to consumers through higher prices or service fees.
All of these factors contribute to the R30 billion annual burden, affecting not only financial institutions and businesses but the broader economy. Even if consumers don’t directly see the cost, they’re paying for it in the form of bank fees, inflated retail prices, and reduced efficiency in the financial system.
The Payment Landscape: Where We Stand Today
Despite significant innovation in the digital payments space, South Africa remains a cash-heavy society. According to the South African Reserve Bank, over R171 billion in cash was in circulation in 2023, a figure that has remained relatively consistent since 2009.
Several key challenges contribute to the slow shift away from cash:
- Low Digital Adoption Among Low-Income Earners: Research from the University of Stellenbosch Business School indicates that lower-income South Africans are more likely to rely on cash, driven by limited access to digital infrastructure and concerns about cost and trust.
- Underbanked Informal Sector: Many informal traders and micro-businesses continue to operate primarily in cash. As noted in recent commentary, “The informal sector is underbanked and their use of financial instruments to grow their business or enhance their cash flow is underutilised.”
- Cost and Connectivity Barriers: While smartphone penetration is high, the cost of mobile data and unreliable internet access remain major obstacles to digital payment adoption, especially in rural and underserved areas.
The Digital Future: Progress, but Not Fast Enough
There have been notable strides towards a digital-first payment future, particularly with initiatives like PayShap, a real-time, low-cost payment system introduced to drive broader financial inclusion.
PayShap allows consumers and businesses to send and receive payments instantly, even across banks, with the added benefit of QR payment support. Since its launch, adoption has been steadily growing, and its potential to support small merchants and underserved consumers is increasingly evident.
Yet, as Tim Masela, Head of the National Payments System at the SARB, recently noted: “Adoption remains slow despite new payment rails being introduced.”
That’s because while infrastructure is improving, South Africa faces an inclusion and education challenge. Simply put, many South Africans are not yet in a position to adopt digital payments due to affordability constraints, infrastructure gaps, and a lack of awareness or trust.
What Needs to Happen Next
Solving South Africa’s cash problem won’t happen overnight, and it won’t happen without collective action across public and private sectors. Several interventions can help accelerate adoption:
- Invest in Digital Education
Initiatives aimed at educating low-income communities on the benefits and safety of digital payments are critical. Community-based training and financial literacy campaigns can help build trust and drive long-term behaviour change.
- Make Payments Affordable
As the SBV highlights, “Availability, cost, and ease of use are the three main drivers of cash-heavy behaviour.” Solutions like India’s Unified Payments Interface (UPI) and Brazil’s Pix, which offer free or low-cost transactions, demonstrate how affordability can catalyse mass adoption.
In South Africa, PayShap is already making digital payments more accessible. While most banks charge a small fee, TymeBank offers PayShap transactions completely free, removing a significant barrier for cost-conscious users.
- Improve Access to Devices and Connectivity
Subsidised access to smart phones, zero-rated payment apps, and broader Wi-Fi infrastructure can help bridge the digital divide and bring millions more into the formal financial ecosystem.
Why Digital Payments Matter for South Africa
Accelerating the shift to digital payments has wide-reaching benefits:
- Lower Costs: Reduces the operational and security costs associated with handling cash.
- Real-Time Settlements: Enables faster business operations and improves cash flow.
- Enhanced Security: Reduces the risk of theft and fraud for businesses and individuals.
- Economic Growth: According to the SARB’s 2024 National Payment System Review, increased digital transaction volumes are positively correlated with GDP growth.
Toward a Less Cash-Dependent South Africa
The transition to a more digitally-enabled economy is not just a matter of convenience, it's an economic imperative. While South Africa has the infrastructure and innovation to lead in digital payments, adoption remains too slow to reverse the massive cost burden of cash.
By prioritising financial inclusion, lowering transaction costs, and bridging the digital divide, we can build a payment ecosystem that works for everyone, and unlock real growth for businesses, consumers, and the broader economy.
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