South Africa Soon to Move Beyond Cash and Conventional ATMs

South Africa soon to move beyond cash and ATMs, and it’s shaping up to be a massive shift in how the country handles its money. The nation’s central bank is gearing up for the biggest overhaul of the cash system in decades. They’re planning to set up a special cash-management company, roll out white-label ATMs, and get a tighter grip on how physical money flows around. All this is aimed at making cash cheaper and way easier for everyone to get their hands on.

In Africa’s largest economy, cash that’s zipping around adds up to over R180 billion, that’s about 2.5% of the gross domestic product. Even with digital payments picking up steam, cash still makes up roughly two-thirds of all transactions. South Africa to move beyond cash and ATMs doesn’t mean ditching it entirely just yet; it’s about smartening it up.

Last year alone, managing, transporting, and keeping all that physical money secure cost around R90 billion. And guess who foots most of that bill? Everyday consumers. Crime eats up about 13% of those expenses, which is a real headache.

South Africa soon to move beyond cash and ATMs

This whole push is called the Cash Smart Strategy, and it’s all about keeping physical cash handy for folks in low-income areas and rural spots. Those communities often don’t have great digital payment options and end up paying fees that can be five times higher than what city dwellers with more money shell out. South Africa cash and ATMs are getting a fresh look to fix that imbalance.

These reforms could be the biggest change since ATMs first showed up more than 40 years ago. They’re designed to lighten the load on people’s wallets when it comes to using cash.

The central bank figures that once South Africa hits digitization levels like India, Brazil, or the European Union, cash usage could drop by 30% to 40%. South Africa soon to move beyond cash and ATMs will happen gradually as more people go digital.

“It’s a very radical transformation of the industry,” says Pradeep Maharaj, who’s heading up the South African Reserve Bank’s Payments Ecosystem Modernisation Programme. He shared that in a recent interview, and you can tell he’s excited about the potential.

At the heart of this plan is creating a cash utility company. It would be co-owned by banks, retailers, and other players. Think of it like the Netherlands’ Geldmaat setup, a joint venture between big banks like ABN AMRO, ING Groep, and Rabobank that runs a single, unified ATM network.

This new utility would figure out exactly how much cash people need where and distribute it smartly. That would end the R480 million indirect subsidy that a handful of private companies get right now for holding and circulating physical money on behalf of the central bank. South Africa to move beyond cash and ATMs means cutting out those middlemen perks.

Right now, most ATMs are owned and run by banks like Capitec Bank Holdings and FirstRand. Under the plan, they’d fold into this new company and turn into white-label ATMs. That means any bank’s customers could use them for little or no fee.

“There’ll be complete interoperability, and therefore we’d be able to reduce the fees to almost zero,” Maharaj explained. South Africa cash and ATMs would finally feel fair and open to all.

Sure, this might ding some commercial banks’ revenue a bit, but Maharaj hopes the savings on their own costs will more than make up for it. “We hope that doing this would reduce the costs they incur by even more and make up for that,” he added.

The strategy isn’t going to be free, it’ll cost something to pull off. But as Jannie Rossouw, an honorary professor at the University of the Witwatersrand’s business school, puts it, “it will be a worthwhile shake-up if we can make cash cheaper, more accessible and safer.” He also points out that less cash floating around could trim the central bank’s seigniorage income, which is the interest it earns on deposits swapped for notes.

South Africa soon to move beyond cash and ATMs includes some extra regulatory tweaks too. The central bank is eyeing rules that stretch beyond just lenders, maybe even operating licenses for cash-in-transit companies, retailers, and certain payment-service providers.

A draft of the new regulatory framework should drop early next year. They’re also talking to big grocery chains like Shoprite Holdings and Pick n Pay Stores. Those guys recycle up to R100 billion in cash every year. The idea is to get them involved with stakes in the utility and let them act as licensed cash wholesalers with direct access. That could actually boost their own operations.

The Reserve Bank laid out the full plan to banks this month and starts chatting with industry experts in January. Getting everything rolled out might take up to three years, but it sounds like a solid step forward.

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