By Julius Ewudo, ASEAN Region Representative
The South Africa card payment market, which has been on the rise for the past few years, registered a subdued growth of 3.7 per cent in 2020 due to COVID-19 with reduced consumer and commercial spending. However, with the gradual recovery in economic activities, card payments are expected to rise by 7.6 per cent to reach ZAR1.4 trillion (US$97.3bn) in 2021, according to GlobalData.
Lead Banking and Payments Analyst at GlobalData, Ravi Sharma comments: “South Africa, traditionally being a cash-driven society, is gradually shifting towards electronic payments, which has resulted in a rise in card payments in the past five years. The combined efforts of the government and financial institutions to boost financial awareness through the launch of financial literacy programs, the provision of basic bank accounts, as well as the expansion of payment card acceptance among retailers supported this growth. Though the COVID-19 pandemic has impacted consumer spending, it has also highlighted the importance of non-cash payment methods, pushing the use of card payments in the country.”
The preference for convenient and seamless payments has soared in South Africa during this pandemic, with an increasing number of consumers and merchants embracing digital channels for their purchases such as contactless payments and e-commerce.
To encourage the shift away from cash, banks in South Africa increased the limit for contactless card payment without the use of a PIN from ZAR200 (US$13.65) to ZAR500 (US$34.13). As debit and credit cards account for over a third of all online spending in the country, a rise in e-commerce purchases will further push the usage of card payments.
Sharma adds: “The COVID-19 outbreak hampered the growth of the card payments market in South Africa in 2020. However, with gradual economic recovery, improving payment infrastructure and rising contactless and e-commerce adoption, the card payments market is expected to grow at a compound annual growth rate (CAGR) of 7.7 per cent between 2020 and 2024 to reach ZAR1.8 trillion (US$121.4bn) in 2024.”
