SARB plans major overhaul of ATM system to cut costs and improve access

South Africa’s cash system is set for its biggest overhaul in decades, as the Reserve Bank unveils plans to make physical money more accessible and cheaper for citizens.

Despite the rapid rise of digital payments, cash still accounts for two thirds of all transactions in South Africa and costs for handling money hit around R90 billion last year.

But the new Cash Smart Strategy aims to reduce costs and help ensure rural and low-income communities aren’t left behind as the economy becomes more and more digital.

Pradeep Maharaj, Head of the Reserve Bank’s Payments Ecosystem Modernisation Programme says cash remains a fundemental feature of the South African economy.

"62% of South Africans rely on cash for their daily transactions and do not have digital options for payments."

The Cash Smart Strategy is designed to keep cash available for communities that have fewer digital payment options.

"Cash will always be a feature of the economy...at SARB we believe that a cashless society is not an objective of any of our work policies or interventions in the market" says Maharaj.

However, the overhaul is expected to see cash usage drop by 30% to 40% as a result of South Africa eventually hitting digitisation levels along the lines of those in India, Brazil and the European Union.

A key aspect of the strategy is transform bank-owned ATMs into white-label machines, allowing customers from any bank to withdraw money at minimal or no cost.

"Average South Africans travel around 14 km to access cash, generally in the townships and rural areas travelling far longer distances."

By converting ATMs the existing network of machines can be redistributed more equitably, says Maharaj.

"They'll be no disloyalty fees for using and ATM that does not belong to the institution that holds your account."

The rollout may take up to three years adds Maharaj.

To listen to Pradeep Maharaj in conversation with CapeTalk's John Maytham, click audio below: