Cash is king - but digital payments are coming to the throne



Even with a high banked population and a multitude of electronic payment options available, the average South African still use cash for daily purchases and payments with an estimated 78-80% of transactions being in cash.

Anton van der Merwe, the recently-appointed COO of Ukheshe Technologies, a fintech enablement partner that works with financial institutions to grow in the rapidly-expanding digital space, says that for these reasons alone, the opportunities for digital payments are set to boom.

Van der Merwe, who has a strong background in traditional financial environments says that his appointment at Ukheshe represents the significant shift in the traditional and fintech spaces: “New technologies are expected to change the local landscape as emerging trends accelerate and traditional financial services providers recognise the value in partnering with fintechs to deliver solutions quickly and efficiently.”

Electronic payments were first introduced in SA around 40 years ago, yet today, there are still many ecosystems such as the taxi environment, rural areas and townships that are cash-heavy. That means the potential in the digital space is immense – reducing the use of cash by just 8 percent, for example, and growing digital transactions by that same number, means a shift of 10-15 billion transactions annually.


“Looking at the underpenetrated target markets we can already see how technology can make further significant differences. For example, if South Africa’s 16 million daily transport commuters were able to pay by scanning a QR code instead of counting out cash – with the transaction reflected in their accounts in real-time. Not only would this simplify the process, but it would also represent billions in value for the institutions enabling transactions,” says van der Merwe.


As part of its National Payment System Framework and Strategy – Vision 2025, the South African Reserve Bank has outlined its vision for growth in financial inclusion and greater electronic payments and within the broader financial industry, these efforts are gaining momentum through new industry initiatives. Surveys show that over 70% of South Africans would want to transact on their phone, while there are an estimated 1 million township merchants that could be included in the digital payments ecosystem.


Van der Merwe says that the country already has a very high level of banked individuals, all that’s lacking is the infrastructure to accept digital payments on a large scale: “That’s where fintech enablement partners like Ukheshe come in. New solutions such as real-time QR code payments and recently-launched Whatsapp payments, in partnership with banks and retailers, demonstrates how large, traditional financial institutions or any company looking for a payment solution, can keep up with the rapidly changing needs of consumers.”


He says that such partnerships combine the agility of smaller fintech firms with the reach and trust of traditional financial institutions, bringing customer-centric solutions to market with greater speed and ease. Conversely, our digital payments solution, Eclipse, can also work entirely independently too. Through Eclipse, Ukheshe’s locally developed universal fintech API, the company has enabled card issuing, made up of three telcos, six banks and fintechs, 334 029 merchants and 2 271 880 apps.


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