With credit card fraud at an all-time high it is no wonder consumers prefer to use cash.
The iol.com reports that ‘credit card fraud has risen from R434 million in 2016 to R436 700 million last year, according to a SA Banking Risk Information Centre (Sabric).1 Thus, it is no surprise that people prefer to use cash.
According to pymnts.com, consumers are not comfortable paying for goods online and ‘cash continues to be the most trusted and widely used payment method in the country’ 2.
Mybroadband.co.za reports that ‘Mark Labuschagne, Head of Cash and Cheque at Absa Retail and Business Banking says that ‘the demand for cash in the country was expected to grow in the coming years.’
Therefore, it is of little surprise that consumers are ditching the credit cards and turning to online companies for personal loans when they need financial assistance.
Due to the unexpected preference for cash, companies across South Africa have been forced to make adjustments to their plans, as consumers stay avoid making credit card transactions, and the trend looks set to continue. For example Uber began taking cash payments due to customer requests. 3
How bad is it?
South Africa’s banking industry is struggling to keep up with the levels of credit card fraud. Fin24 reports that the most common forms of credit card fraud were: card numbers being used fraudently, counterfeit card fraud and stolen card fraud’ 4. Many customers are allowing their pin to be seen by not covering the ATM screen properly when in use and sharing their pins with spouses.
How to use your card safely:
- Never share your pin with anyone
- Change your pin immediately if you think someone may have seen it
- Do not respond to phishing emails
- Use strong passwords that you can remember
- Run your anti-virus software regularly to check for viruses
Are we stuck in the past or ahead of the game?
Will an over-reliance on cash have a negative impact on South Africa’s economy? No. It is, however, something for online businesses to consider as the global demand for mobile usage is much lower in South Africa. Businesses will need to innovate and adapt to the South African market.
By paying in cash, consumers are paying real not borrowed assets, thus helping to relieve the national debt. For the consumer a move away from long-term debt can only be a good thing. The cost to businesses is likely to be significant as they take steps to adapt. Managing cash is also a great way to improve financial literacy as we seek to re-educate the nation about financial management.
As mybroadband.co.za suggests, a ‘demand’ for cash ‘remains healthy’, ‘cash is the lifeblood of our economy…even though it carries security risks like cash-in-transit robberies’
However, according to mybroadband.co.za digital payments are eventually expected to expand, so it will be interesting to see how long the preference for cash lasts.
Do you prefer to use cash? Or have you got a great money-saving tip. We would love to hear from you.