For more than a decade, musician Thomas Nhassavele has been walking around the payment device in the parking lot of Johannesburg’s Rosebank shopping centre, where drivers deposit his replacement in his guitar case.
But Nhassavele’s earnings have declined over the past two years as an increasing number of people at the mall use cards to pay in the machine’s new cashless payment formula, with some muttering quick excuses before heading to the exits.
“There has been about 50% relief in donations since the mall brought cashless ticket payment. A lot of other people just don’t need to bring cash anymore,” he said, playing his guitar.
Cashless bills in the country are on the rise, as consumers are attracted by the convenience, safety and hygiene of using a card or scanning a QR code in post-COVID-19 South Africa and are plagued by crime, to the detriment of the informal economy.
While analysts say the cashless movement has boosted sales for small businesses, those that rely on the small upgrade — street musicians, street vendors or gas station employees who rely on tips — say the upgrade has hurt their income.
From Ghana to Kenya, the 59 billion cashless transactions made in Africa in 2020 are expected to triple by 2030 to 172 billion, according to a report by PricewaterhouseCoopers (PwC).
“We have to settle for that generation to replace things, but I’m worried that this cashless world is wiping out our income,” Nhassavele told Context as a visitor dropped a rand coin ($0. 06) into his guitar case.
Smartphone penetration in South Africa increased from 48% to 78% in the last 4 years, while the number of South Africans over the age of 15 with bank accounts increased from 54% in 2011 to 84% in 2021, according to World Bank.
That lays a foundation forged for cashless payments, said Michael Thomson, director of SnapScan, a contactless QR code payment formula that serves 70,000 merchants nationwide and has 3 million downloads.
But there are barriers to expanding adoption.
While women in South Africa are more likely to have bank accounts than their counterparts in other countries in the region, lack of financial wisdom and discrimination save them from the full possibility of banking resources and opportunities, the University of Johannesburg found.
Navigating cashless systems requires a bank account, a cell phone number, web access and virtual literacy, which are not available to those without ID or smartphones, as well as refugees and the homeless.
“The formal invoice formula and its inventions tend to be used in high-income markets than in low-income or underdeveloped sectors of the economy,” said Chantal Maritz, head of PwC’s strategy and invoices team.
Nearly 30% of South Africa’s economy is informal, according to World Economics data.
Of South Africans with bank accounts, 25 percent, or another 8. 3 million people, don’t have enough banking services, meaning they can’t complete banking services, Maritz said.
“While virtual invoices don’t require a bank account, those street vendors, artists and beggars would want a virtual price store containing their virtual cash to make and settle invoices,” he said. This can come only with an e-wallet connected to a bank.
Another organization feeling the cashless pinch in South Africa is gas station employees who refuel visitors’ cars, wipe the windshield, and then, if the visitor needs to pay with a card, take the payment terminal to the driver.
“Drivers need to tap and go. It’s bad for us because tips don’t come when other people use cards,” said Lebogang Ramathoka, a gas station attendant in Johannesburg, adding that tips used to account for more than 30 percent of his monthly salary. .
Recently, some fuel stations have allowed consumers to tip on card payments, Ramathoka said.
“There deserves to be an option on the card device that asks if they need to tip us, it’s less awkward than having to ask them,” he said as he had a drink at a table behind the fuel station on his break.
A number of other payment features aimed at popularizing cashless bills have been introduced in recent years, from First National Bank’s e-wallet that consumers send cash to a cell phone number, to Yoco’s wireless card device and QR codes from Zapper and SnapScan.
Yoco is a South African portable card device used by 2,50,000 South African businesses that connects to a Bluetooth phone and provides unlimited and free access to 4G and WiFi connectivity, for less than 3% of payment payments.
Both Yoco and SnapScan say car guards, other people who monitor parked cars to make sure they’re not stolen, who have bank accounts have begun giving drivers the ability to pay for Yoco and SnapScan without cash.
Timothy, a recycler who also cleans streets with traffic lights in Johannesburg, said his cell phone was his saving grace during Covid-19 blackouts, as he can ask his contacts to send him cash via an e-wallet.
“That’s why I survived,” he said, asking to use only his first call for his identity.
Ultimately, SnapScan’s Thomson said, “the easier identity documents and evidence of address” needed to download bank accounts, virtual wallets and SIM cards would also open up cashless payment systems to marginalized groups.
But employees at fuel stations like Ramathoka hope that the backlog of cashless bills won’t be absolutely cash. “People have tight budgets, and a coin here or there is easier to give away than swiping on a map,” he said.
“If there are no coins to give, I’m afraid we’re going to have a hard time. “
This article was first published in Thomson Reuters Foundation News.