Five benefits of trading with cash

Issue 1 2021 Retail (Industry)

While there is a progressive drive towards digital and electronic transactions, the reality is that cash still plays a dominant and valuable role in the South African economy, for both consumers and retailers.

That’s according to Mark Templemore-Walters, operations director for Cash Connect. He shares five reasons why the drive towards a cashless society is not good for consumers or the retail sector, and how retailers can benefit from a healthy mix of both cash and digital payment options.

Digital payments exclude many of the country’s marginalised people: Anyone can use cash to transact, particularly in a country where approximately 11 million people are unbanked. Cash doesn’t discriminate based on whether you own a smartphone, can get a bank card or have an identity document for a FICA or Know Your Customer process. It allows immediate participation in the economy for all, including people living in rural areas or foreign nationals without South African identity documents or bank accounts.

Cash is still cheaper than digital transactions: Contrary to the popular narrative, costs associated with cash transactions are lower and affordable, especially for retail merchants. What’s more, cash is convenient and universal. The technology barrier of needing a point-of-sale device, computer or phone to pay and be paid doesn’t exist with cash.

For retail merchants, card and digital payment costs range between R0,90 and R4,00 per R100. One of the most popular mobile payments acceptance platforms costs up to R3,00 per R100 in sales.

The costs of accepting cash are significantly lower: consider, for instance, that the cash handling costs for a retail business with cash receipts of R2 million a month, and an automated cash handling system (including a robust, intelligent cash vault and six-day cash in transit (CIT) collection service), comes out at around R0,75 per R100. This underpins the fact that automated cash management has indeed proven to provide retailers with a significant saving of more than 20%.

Cash is easy to use: Cash enables anyone to trade and participate in our economy. Cash does not discriminate in any form, in fact the use of cash allows for immediate financial inclusivity – a goal set out by our very own national development plan.

Digital payments have privacy risks: cash offers consumers privacy and control. One reason financial institutions and tech companies are so keen on digital transactions is that it gives them access to a treasure trove of consumer data that is used for ongoing marketing efforts. They can use this data to target people for cross-selling and upselling opportunities that are not always in consumers’ interests or invade consumer privacy.

The risk of payment fraud and cybercrime can be higher than the risk of cash loss: Digital, credit and debit card fraud in SA in 2019 was more than R1,35 billion, according to SABRIC; cash losses were less than 20% of this value. Consumers are increasingly targeted in digital fraud and cybercrime scams because criminals tend to follow the money. Recent incidences of digital fraud at South Africa’s Postbank and Germany’s Wirecard illustrate that digital is far from risk-free.

Cash is about choice

More than 50% of consumer transactions are completed with notes and coins, according to the Payments Association of South Africa. Taking cash out of people’s hands could harm those as a cashless approach purports to help by restricting choice for consumers and merchants, who often have good reasons for preferring cash.

“While cashless channels have an important role to fulfil in the promotion of financial inclusion, it’s important to protect and celebrate the vital role that cash plays in our economy. In the industry’s enthusiasm for technology solutions, it should leave no consumer behind, but include and empower everyone with choice and control over their financial lives,” concludes Templemore-Walters.

Share this article:
Share via emailShare via LinkedInPrint this page

Further reading:

Helping retailers optimise monitoring and security
Guardian Eye Retail (Industry) Surveillance
From a smart retail perspective, it is crucial to understand that monitoring stock and other assets through camera surveillance and a variety of Internet of Things (IoT) sensors stretches further than the stores themselves.

The right security solution removes the opportunity
Asset Management Retail (Industry)
South African retailers are facing a multitude of challenges, including economic fluctuations, changing consumer behaviour, increased competition, supply chain disruptions, regulatory changes and the need to adapt to digital transformation, not to mention theft.

Improved control with electronic keys
YeboTech Retail (Industry) Access Control & Identity Management Products & Solutions
By adopting an electronic access system, retailers can equip all employees with a Yebotech Key to enhance their ability to assist customers more effectively, leading to increased sales.

Four intelligent ways to bring shoppers to your mall
Hikvision South Africa Retail (Industry) Surveillance
In this digital age, when footfall is declining and ecommerce is growing, the challenges for shopping malls seem bigger than ever; the fact is, customer experience is critical for retailers to attract more shoppers.

Retail security and patrol systems
OnGuard Retail (Industry) Security Services & Risk Management Products & Solutions
OnGuard patrol systems provide electronic solutions that help security personnel monitor and manage their patrols within the retail space, typically consisting of handheld devices or mobile applications that allow guards to record their presence at checkpoints.

Personnel changes at G4S and Deposita
Deposita News & Events Security Services & Risk Management Retail (Industry)
Over the past 36 months, there has been significant volatility across markets and sectors worldwide. In response to these market fluctuations, cash has become an increasingly important payment instrument.

Making cash management more intelligent
Deposita Retail (Industry) Asset Management Products & Solutions
By using state of the art SaaS cash and payment management solutions, keeping a close eye on the situation is a breeze. In fact, it’ll save you loads of stress, time, and overhead costs.

Malls require unique fire detection designs
Retail (Industry)
One of the primary fire safety concerns for large open spaces and open plan areas within buildings is the potential for rapid spread of fire and smoke, early alarm is therefore paramount to both life and building safety.

Cloud for security and operational optimisation
Secutel Technologies Retail (Industry) Surveillance Integrated Solutions
With the abundance of services available to retailers, SMART Security Solutions asked Andre Vermeulen, GM at Secutel Technologies about what the company’s SecuVue cloud services can do for this market.

Partnering for security and more
Guardian Eye Retail (Industry) Surveillance Integrated Solutions
From a smart retail perspective, it is crucial to understand that monitoring stock and other assets through camera surveillance and a variety of Internet of Things (IoT) sensors stretches further than the stores themselves.