Can South Africans ditch cash?

In addition to cellphone banking, there has also been the advent of mobile wallets like MiMoney, M-Pesa and PayPal - products which have given consumers an increasing numbers of options to transact locally and abroad.

And yet carrying cash is viewed as a cleaner, more cost effective way of buying goods, a perception that may well persist.

"There is a weird perception that the cost of carrying cash is zero," said Brian Richardson, CEO of low-cost banking service Wizzit, in an interview with Fin24.com.

In contrast, were consumers to use a card or electronic currency, the transaction fee would be transparent and obvious, especially if they were in the habit of examining monthly statements. They may then argue that transacting in such a way is too expensive.

By the same token, South Africans have long complained about the lumped costs of bank charges levied on their accounts.

The banks, in turn, will counter that the cost of transporting cash and replacing blown-up ATMs necessitates these fees.

Asked whether South Africa was likely to ever go completely cashless, Richardson said he had seen reports that indicated a country like Holland could be cashless by the year 2015, and it was possible that South Africa could reach this point "in our lifetime".

Perception change?

However, this would appear to call for a perception shift from South African consumers and the way they transact with merchants.

John Campbell of MiMoney told Fin24.com that his firm had enjoyed mixed success in getting South Africans to buy into an "e-currency" facilitated by mobile devices.

However, there had been an uptick recently as South Africans began to trust the technology and expand the range of the products they bought online.

Whereas online shoppers had previously only looked at "traditional" Kalahari.net products like books and CDs, they were now buying movie tickets and electronic goods.

Campbell said this was likely to drive down the costs of transacting through mobile devices as transaction volumes picked up domestically.

At what point, however, does the trust factor for e-currency trump holding physical cash in their hands?

The point was made at a Capitec analyst briefing last week where the bank's CEO, Riaan Stassen, was quizzed on the uptake of a proposed card system, a product that would remove the need for taxi drivers and commuters to carry cash.

With 76% of Capitec customers believed to use taxis as their primary mode of transport, the bank expected them to adopt a smart card technology in preference to carrying around cash.

Stassen said, however, that Capitec has had limited success with this initiative: taxi drivers are wary of implementing it owing to a lack of trust in "virtual currency", but also because it would be better not to create a paper trail for the taxman to follow.

- Fin24.com