Is cash really on its way out? With the surge in fintech innovations and digital payment systems, it might seem that way. However, in Africa, it remains the go-to method for millions of people, even in a digital age.
Despite the influx of fintech companies offering accessible digital services, cash is still the primary way people transact in many African regions. For Fintechs operating in these markets, this presents an opportunity, not a setback. By offering both physical and digital options, they can help bridge the gap and guide customers on their journey towards digital payments.
The key is understanding the market. For instance, in South Africa, about 20 million adults still prefer cash transactions. Even though 80% of South Africans have bank accounts, cash continues to dominate, with 94% of adults withdrawing physical notes each month, according to a FinScope study. Around 73% of point-of-sale transactions still use cash.
The informal economy, valued between R600-billion and R750-billion, shows just how crucial physical notes are for many. As digital solutions expand, fintech companies must consider: Should these cash-reliant individuals be left out of the digital economy? The answer is no.
Fintechs like Mukuru are addressing this by offering customers a choice between cash and digital payments. Some people receive salaries in cash, while others, even when paid digitally, prefer withdrawing cash for transactions. This highlights the importance of providing flexible payment options.
Even tech-savvy consumers need physical notes occasionally. Whether at a local market or an event without card facilities, the need for it subsists. Fintechs should ease users into digital services gradually, building trust along the way, especially for older or vulnerable populations.
Mukuru’s partnership with Payfast, which enables cash-based e-commerce through MukuruPay, is an example of how fintechs can merge physical and digital solutions. In an increasingly digital world, cash remains vital for financial inclusion, and fintechs must offer customers the flexibility to transition at their own whim.
