South Africans dumping cash and ATMs

South Africans have significantly cut their reliance on cash to conduct transactions, with the country’s biggest banks seeing a rapid rise in the use of digital platforms. 

Data from Standard Bank shows a significant decline in cash withdrawals and deposits since 2019 as more customers embrace digital banking alternatives.

This shift was primarily accelerated by the COVID-19 lockdowns, which pushed many customers toward card payments and digital banking channels.

This has come with significant growth in its digital transaction channels, with the Banking App alone experiencing a 200% increase in transaction volumes over the same period. 

Thus, by October 2024, monthly in-branch cash withdrawals had fallen by 64%, and branch cash deposits had dropped by 61% across personal, business, and corporate segments compared to 2019. 

The decline is evident across all customer segments, though its scale varies. 

Standard Bank’s head of personal and private banking, Kabelo Makeke, said this is part of a strategy from banks to adjust their services to better align with customer needs. 

“This aligns with our strategy to enable cash transactions through self-service and other alternative cash distribution channels while keeping branches focused on sales, service, and relationship banking.” 

However, cash is still dominant in the South African economy. Reserve Bank data shows that nearly half of all adults withdraw all their money as soon as it is deposited in their accounts. 

This results in the majority of payments in South Africa being conducted using physical banknotes. 

Reasons for this include a lack of trust in banks, fees associated with card transactions, and a lack of acceptance of cards by merchants in the informal economy. 

The Reserve Bank also revealed as part of its Digital Payments Roadmap that there has been little change in the demand for banknotes and coins, which fell by only 0.8% in 2023. 

Standard Bank’s data revealed that South Africans have reduced their cash usage in recent years, with people from different income levels taking up alternatives at various rates. 

The most significant decline in cash deposits in the branch has been among personal banking clients, with an 83% drop in the past five years, it said.  

This is due to many of them now largely relying on ATMs and retailers to fulfil their cash withdrawal and cash deposit needs. 

The cash transactions left in the branch are predominantly the bulk and high-value transactions that the ATMs cannot handle.

Standard Bank has also seen a sharp rise in the use of contactless payment methods and digital wallets. Over half of the bank’s clients tap their cards or phones at supermarkets, restaurants, and fuel stations.

These payment methods now account for 53% of all bank client transactions, up from 42% just two years ago.

The trend spans all income brackets, with the bank noting double-digit year-on-year increases in tap-to-pay transactions among middle- and high-income clients.

This shift does not come without casualties, with Standard Bank and some of the other traditional banks in South Africa making significant changes to their physical infrastructure. 

All of the traditional Big Four banks – Absa, Standard Bank, Nedbank, and FirstRand (FNB) – have shut down ATMs across South Africa as they have become inefficient to operate. 

The digital offerings from these banks have largely replaced the need for ATMs but have not impacted the need for a branch experience.

Some services cannot be offered through digital platforms and still require personal interactions, maintaining the need for a significant branch network. 

The trend of ATMs being shut down and branch networks growing but the size of the facilities shrinking is set to continue in 2025. 

The number of ATMs is also expected to decline in the coming years as these banks invest in new technology that makes them more efficient. 

For example, Standard Bank has invested in state-of-the-art ATMs that have significantly improved transaction speed and overall quality of service.

The new ATMs have higher capacity and offer more client services, including real-time acceptance, validation, and recycling of cash. 

Clients can also obtain official bank documents such as account statements, proof of banking details, and confirmation of deposit, which can either be printed at the ATM or sent via e-mail.

“In some cases, this will result in the removal or relocation of low transacting ATMs to areas that are more convenient and accessible to clients,” Makeke previously told Daily Investor. 

Branches, on the other hand, now primarily serve business and corporate customers who are performing high-value and complex deposits that cannot be processed by the ATMs.