TALKING

With the massive influx of fintech companies constantly innovating to bring accessible products and services to the underserved and unbanked in African societies , one might be tempted to declare that cash is dead , or that if it is not dead yet , it is on its very last legs . However , fintech that are well-embedded in Africa and other emerging markets will understand cash is , in fact , alive and well . In many instances , it is the primary form of tender .

Rather than spell doom and gloom for fintech on the continent , it provides a compelling opportunity . By listening to customers and providing the right products and services at the right time , and , importantly , on the right platform fintech can bridge the gap between cash and digital payments . It means providing choice and then walking along the digital journey with customers as they choose to move from cash to digital payment options .

When designing products and services , it starts with understanding the market .

Let us look at South Africa . Around 20 million adults in this country prefer cash transactions . This includes banked individuals who still prefer to transact in their day-to-day lives in cash . Despite 80 % of South Africans having bank accounts , cash remains the dominant payment method .

A striking 94 % of adults withdraw cash each month , according to the recent FinScope study . This is shown in daily transaction behaviour at retailers on the ground . Statista writes that about 73 % of point-of-sale transactions in this country are still conducted in cash . According to a recent estimate in an index tracking digital adoption , the informal economy is estimated to be worth R600-billion to R750-billion .

The point is that there is strong evidence that cash is central to millions of people in South Africa .

Now , as the world digitises and fintech and other service providers develop even more sophisticated products and services , an important question must be asked : should these cash-bound consumers be excluded from transacting in the digital economy ? The answer is no .

It is important for payment providers and fintech to serve these customers in ways that suit them , and that includes giving them a choice of a range of payment options – cash and digital .

But do not be fooled . While access is important , it would be a mistake to assume that just because someone has a bank account , they will always prefer digital transactions . And so , while we all understand and appreciate the informal economy , there are large swathes of those in the formal economy that also still prefer cash .

Many receive their salaries in cash and therefore must pay with it , while others may receive their income digitally but withdraw it to use cash for payments out of necessity or the added control of holding their funds in their hands .

For fintech looking to make inroads in this country , and in many others around the continent , the key point is to ensure customers are given a choice to use their preferred payment method , whether that is cash , digital , or a combination of both .

Let us take a step back and look at the life of a digitally savvy consumer . While we may make use of applications for online food delivery and conduct banking and other transactions digitally , many of us still enjoy physical experiences . Other times we are forced to go with hard currency . What about when you are on holiday and an informal farmers ’ market only operates with cash ? You are at a school sporting event at the weekend and the hotdog stand does not have card facilities .

Even digitally savvy consumers may still have a preference , or need , for physical cash-based transactions , and so forcing a digital-or-nothing

Cat Denoon-Stevens , Head of Product Incubation , Mukuru

www . intelligentcio . com INTELLIGENTCIO AFRICA 31