TECH & INNOVATION: Why Africa struggles to move beyond cash
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Chantal Maritz, PwC Africa Payments Transformation Leader talks Why Africa struggles to move beyond cash.
The survey is a biannual study of consumers’ payment and open banking preferences. For the first time since its inception in 2018, PwC Africa participated in the study. Respondents were interviewed across three key African economies, namely South Africa (representing the South market), Kenya (representing the East market) and Nigeria (representing the West market). These countries were chosen as they represent the largest economies across each market area.
Of the 1,357 respondents who participated in the survey between September and October 2022, a third said cash was their preferred payment method. In South Africa, the heaviest cash users were youth aged 18 to 25. Half (50%) of respondents said they pay with cash because there is no alternative payment option available, or because merchants ask for it.
Chantal Maritz, PwC Africa Payments Transformation Leader, says: “This highlights the lack of varied digital payment acceptance mediums and infrastructure across all three African countries. However, another key driver of cash prevalence across Africa is a lack of financial education. Consumers with low financial literacy often overlook indirect costs of cash, such as the cost of their transportation to cash access points, security risks, and loss of interest. This could result in respondents not finding digital payment alternatives intuitive, making them revert to what they know.”
Debit cards and the rise of smartphone penetration
Across the three regions, debit cards were the second most utilised payment method, with high use in South Africa (32%) and Nigeria (41%). In South Africa, the high use may be attributed to the country’s large banked population of ~84%, Maritz says. In Nigeria, the banked population increased to 45.3% in 2021, but the high adoption of debit cards is likely due to its large number of point of sale (POS) devices. These POS agents are enabled by a variety of service providers, including banks, fintechs, and telcos.
The survey is a biannual study of consumers’ payment and open banking preferences. For the first time since its inception in 2018, PwC Africa participated in the study. Respondents were interviewed across three key African economies, namely South Africa (representing the South market), Kenya (representing the East market) and Nigeria (representing the West market). These countries were chosen as they represent the largest economies across each market area.
Of the 1,357 respondents who participated in the survey between September and October 2022, a third said cash was their preferred payment method. In South Africa, the heaviest cash users were youth aged 18 to 25. Half (50%) of respondents said they pay with cash because there is no alternative payment option available, or because merchants ask for it.
Chantal Maritz, PwC Africa Payments Transformation Leader, says: “This highlights the lack of varied digital payment acceptance mediums and infrastructure across all three African countries. However, another key driver of cash prevalence across Africa is a lack of financial education. Consumers with low financial literacy often overlook indirect costs of cash, such as the cost of their transportation to cash access points, security risks, and loss of interest. This could result in respondents not finding digital payment alternatives intuitive, making them revert to what they know.”
Debit cards and the rise of smartphone penetration
Across the three regions, debit cards were the second most utilised payment method, with high use in South Africa (32%) and Nigeria (41%). In South Africa, the high use may be attributed to the country’s large banked population of ~84%, Maritz says. In Nigeria, the banked population increased to 45.3% in 2021, but the high adoption of debit cards is likely due to its large number of point of sale (POS) devices. These POS agents are enabled by a variety of service providers, including banks, fintechs, and telcos.
