South Africa’s central bank has unveiled a sweeping strategy to modernise the country's cash system, aiming to lower costs, improve access, and tighten regulatory oversight over the circulation of physical money.
The Cash Smart Strategy, described as the most significant change since ATMs were introduced over forty years ago, aims to address the high costs of cash management — estimated at R90 billion in the past year — which are largely passed on to consumers. Despite growth in digital payments, cash still accounts for around two-thirds of all transaction volumes in South Africa, with roughly R180 billion in circulation.
A central proposal involves creating a cash utility company, co-owned by banks, retailers, and potentially major grocers. This entity would model cash demand, manage distribution, and operate a unified, low-cost ATM network.
“It’s a very radical transformation of the industry,” said Pradeep Maharaj, head of the South African Reserve Bank’s Payments Ecosystem Modernisation Programme. He highlighted that a key goal is achieving “complete interoperability” across ATMs, which would allow customers of any bank to use them at little to no fee. The plan also includes bringing cash-in-transit companies and large retailers under a formal regulatory licensing framework.
The initiative is particularly focused on supporting low-income and rural communities, where access to digital payments is limited and cash-related costs can be up to five times higher than in urban areas. While acknowledging the plan “won’t come without cost,” economist Jannie Rossouw stated it “will be a worthwhile shake-up if we can make cash cheaper, more accessible and safer.”
The Reserve Bank expects cash usage to eventually decline by 30% - 40% as digitisation advances, but emphasises the need for an efficient and secure cash system during the transition. The central bank plans to release a draft regulatory framework early next year, with full implementation estimated to take up to three years.
Market Sentiment
The market is likely to view this proposal as a structural positive for financial inclusion and major retailers like Shoprite and Pick n Pay, which could gain new revenue streams as licensed cash wholesalers. For banks, sentiment is mixed: the potential erosion of lucrative ATM and cash management fees poses a headwind to non-interest revenue. However, this could be offset by significantly lower operational and security costs. The phased, consultative rollout suggests regulatory caution, which may reassure investors concerned about disruptive change. Overall, the strategy signals a long-term commitment to modernising South Africa’s payment infrastructure, potentially reducing systemic cost and crime risk, which would be a net positive for the economy’s efficiency.
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This content has been generated using AI technology and is intended for informational purposes only. While efforts have been made to ensure accuracy and relevance, this text should not be considered professional advice or an official statement. Always verify information from authoritative sources before making any decisions. This is not financial advice.
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