For more than a decade, musician Thomas Nhassavele has been busking next to the parking payment machine at Johannesburg’s Rosebank Mall, where drivers often dropped their change into his guitar case.

But Nhassavele’s takings have dwindled in the past year or two as growing numbers of mall visitors use cards to pay at the machine’s new cashless payment system – some mumbling a quick apology to him before they head for the exits.

“There has been about a 50% reduction in donations since the mall installed cashless ticket payments. Many people just don’t want to carry money anymore,” he said, strumming his guitar.

Cashless payments in the country are on the rise as customers are drawn to the convenience, safety and hygiene of tapping a card or scanning a QR code in post-Covid, crime-ridden South Africa – sometimes at the expense of the informal economy.

While analysts say the cashless move has boosted sales for small businesses, those dependent on loose change – buskers, street traders or fuel station attendants who rely on tips – say the shift has hit their earnings.

From Ghana to Kenya, the 59 billion cashless transactions carried out in Africa in 2020 are expected to nearly triple by 2030 to reach 172 billion, according to a report by PricewaterhouseCoopers (PwC).

“We must accept that technology will change things, but I fear this cashless world will kill our income,” Nhassavele told Context as a customer dropped a one rand ($0.06) coin into his guitar case.

Barriers to banking

Smartphone penetration in South Africa has grown from 48% to 78% in the past four years, while the number of South Africans over the age of 15 with bank accounts rose from 54% in 2011 to 84% in 2021, according to the World Bank.

This lays a strong foundation for cashless payments, said Michael Thomson, creative director at SnapScan, a contactless QR code payment system that caters to 70,000 merchants across the country, and has 3 million downloads.

But there are still barriers to increasing uptake.

While women in South Africa are more likely to have bank accounts than their peers in other countries in the region, a lack of financial literacy and discrimination keeps them from accessing the full potential of banking resources and opportunities, the University of Johannesburg found.

Navigating cashless systems typically requires a bank account, a cellphone number, internet access and digital literacy – not all of them available to those without identification documents or smartphones, including refugees and the homeless.

M-Pesa allows a user to carry out basic banking transactions on a mobile phone, in Kenya. Credit: Rosenfeld Media, CC BY 2.0, via Wikimedia Commons.

“The formal payment system and its innovations tend to be utilised by the higher-income markets rather than the lower-income or under-developed sectors of the economy,” said Chantal Maritz, head of PwC’s strategy and payments team.

Nearly 30% of South Africa’s economy is informal, according to the World Economics data site.

Of the South Africans with bank accounts, 25% – or 8.3 million people – are underbanked, meaning they cannot access full banking services, said Maritz.

“Although digital payments don’t require a bank account, such street vendors, buskers and beggars would require a digital store of value that holds their digital money to make and accept payments,” she said. That could include a bank-linked e-wallet.

Cash is king?

Another group of workers feeling the cashless pinch in South Africa are fuel station attendants who fill up customers’ cars with fuel, clean the windscreen and then – if the customer wants to pay on a card – bring the payment terminal to the driver.

“Drivers want to tap and go. This is bad for us as tips don’t always come when people use cards,” said Lebogang Ramathoka, an attendant at a Johannesburg petrol station, adding that tips had earlier made up more than 30% of his monthly wage.

Recently, some petrol stations have started letting customers add a tip to their card payment, said Ramathoka.

“There should be an option on the card machine that asks them if they want to add a tip for us, it’s less awkward than us having to ask them,” he said, sipping a drink at a table behind the petrol station during his break.

A slew of other payment options aimed at popularising cashless payments have been launched in recent years, from First National Bank’s e-wallet that lets customers send money to a cellphone number, to Yoco’s wireless card machine and Zapper and SnapScan’s QR codes.

Yoco is a portable South African card machine used by 2,50,000 South African businesses that connects to a phone via bluetooth, and offers free, unlimited 4G data and WiFi connectivity, taking less than a 3% fee on payments.

Both Yoco and SnapScan say car guards – people who watch over parked cars to ensure they are not stolen – who have bank accounts have begun giving drivers the options of cashless Yoco and SnapScan payments.

Timothy, a waste-picker who also cleans the streets at traffic lights in Johannesburg, said his cellphone was his saving grace during Covid-19 lockdowns, as he could ask contacts to send him cash via e-wallet.

“It’s the reason I survived,” he said, asking to only use his first name to protect his identity.

Ultimately, said Thomson from SnapScan, “easier access to [the] identification documents and proof of address” needed to get bank accounts, digital wallets and SIM cards, would also open up cashless payment systems to marginalised groups.

But petrol station attendants like Ramathoka hope the surge in cashless payments will not do away with cash altogether. “People are on tight budgets, and a coin here or there is easier to give than swiping on a card,” he said.

“If there are no coins to give I fear we will struggle.”

This article first appeared on Thomson Reuters Foundation News.