Cashless society needs to be more inclusive

10/11/2010 Fraudulent credit cards which were confisticated from various FNB banks, during a discussion on the latest card fraud trends held in Sandton JHB. (960) Photo: Leon Nicholas

10/11/2010 Fraudulent credit cards which were confisticated from various FNB banks, during a discussion on the latest card fraud trends held in Sandton JHB. (960) Photo: Leon Nicholas

Published Feb 8, 2015

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Johannesburg - Cash usage in South Africa still made up over 75 percent of transactions in the retail sector, which needed to be improved to encompass electronic payments as part of the push for financial inclusion of people not currently catered for by the cashless financial system, Mastercard chief financial officer Martina Hund-Mejean said.

Cost to economy

Hund-Mejean, who is based in the US, said apart from the convenience of not carrying wads of money around, cashless transactions were less costly to the economy, because currency had to be printed, transported and counted among other associated tasks.

“There are a lot of studies that have been done on how much cash costs the economy, depending on the market, it could be between 0.5 percent and 1.5 percent of GDP (gross domestic product),” she said.

Mastercard is a technology company in the global payments industry, operating the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories.

According to a World Bank study, in Africa less than a quarter of all adults make use of bank accounts or other financial products from a formal financial institution, and 90 percent of all consumer payments are conducted with cash.

According to the new Digital Evolution Index developed by MasterCard and The Fletcher School at Tufts University, South Africa’s digital economy is the most developed in Africa, and one of the fastest growing in the world.

The index tracks a country’s movement towards digital evolution, gauges progress and assesses challenges in 50 countries that make up the index.

South Africa ranks 33 out of 50 countries measured in the index in digital readiness, which is defined by the markets’ ability to support and encourage digital commerce and payments. In Africa, it ranks ahead of Egypt (48), Kenya (49), and Nigeria (50). South Africa also emerged as the fourth-fastest growing digital economy behind China, Malaysia and Thailand.

Internet access

“South Africa’s speed of growth can be attributed to the rapidly increasing proportion of the population with internet access, an 86 percent adult cellphone penetration rate, and a highly developed telecommunications network.

However, what is significant is that all four of the African countries measured share a common trait of moving at a high rate of speed towards digital evolution, demonstrating huge growth potential for e-commerce,” Ted Iacobuzio, the vice-president, Global Insights, MasterCard, is quoted as saying.

Hund-Mejean said distilled information on the performance of various African countries on the uptake of Mastercard services, the global company had a particular focus on South Africa and Nigeria, because they were the most robust economies, compared to sub-saharan Africa.

Business Report

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