Cash is king in South Africa

Cash is still king in South Africa, as the country’s largest clothing retailer reported that 90% of its sales are still made in cash.

In a trading update, Pepkor said that the company’s cash sales increased by 5.6% in the year through September 2023, and 90% of sales are generated in cash.

However, Pepkor offers alternatives to cash payments, and its results indicate that these alternatives are gradually replacing cash. 

Credit sales increased by 35.6%, but it is not a material sales enabler for the company.

The growth in credit sales is due to the implementation of Pepkor’s credit interoperability strategy in the South African-based clothing, footwear and home retail brands. 

As a result, the overall group credit sales mix increased to 10% from 8% in the prior year. 

While 90% of the company’s sales are still generated in cash, this is a slight decrease from the start of the year.

In its interim results for the six months ended March 2023, Pepkor reported that 93% of group sales were conducted in cash. 

Earlier this year, BankservAfrica found that nine out of ten transactions in South Africa are still made in cash, with 95% of informal small business customers and 63% of formal business customers opting to pay in cash.

Many South Africans view paying in cash as safer and more convenient, while fees on digital platforms are seen as too high.

Cash and crime

South African Reserve Bank’s (SARB) Deputy Governor Fundi Tshazibana recently expressed her concern over the amount of cash in circulation in South Africa.

South Africa has between R160 billion and R180 billion of cash in circulation, she said.

Tshazibana explained that this amount of cash presents several challenges for the country’s individuals and businesses. 

“It limits the types of transactions that can be interacted with and presents a set of vulnerabilities,” she explained. 

“Losing physical cash means the loss is irreversible, unlike electronic wallets or other forms of payment.”

This significant amount of cash being used in the country also brings about concerns related to criminal elements. 

“Conversations have revolved around tracking cash crossing borders, a responsibility of revenue authorities,” she said.

South Africa has also seen increased crime related to cash in transit (CIT). The Cash-In-Transit Association of South Africa shed light on how this crime increased.

There had been 217 CIT robberies across the country between January and August, compared to 191 in 2022 and 188 in 2021. This equates to almost one CIT robbery a day in 2023.

Tshazibana said this emphasises the need to secure physical cash in the country, and one way to achieve that is by reducing the amount of cash used in the country.