South Africa is a living paradox; it is simultaneously highly banked and digital, while being anchored in cash. With deeper financial inclusion, millions of people can access greater financial security and new opportunities. This blog unpacks why the gap between access and real usage persists, what it costs, and opportunities for change.

Financial inclusion is crucial to boosting the South African economy. However, there is a disconnect between how financial services currently operate and consumers’ lived experiences. Understanding this gap and developing strategies to address it can help banks build deeper customer relationships.

Financial inclusion in South Africa as of 2026

The Centre for Financial Inclusion defines full financial inclusion as a ‘state in which everyone who can use them has access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, with respect and dignity.’

Financial inclusion is at the core of the South African Reserve Bank’s Vision 2025. This goal has seen mixed success. On the one hand, 81,1% of South African adults own an account through a financial institution or a mobile money provider. However, 56% of transactions are made with cash.

More concerning, however, is that only 14% of South Africans have retirement plans and 64% report they either always (37%) or sometimes (27%) withdraw all their money from their bank accounts each month.

The problem with cash

The current reliance on physical money costs the South African economy approximately R30 billion each year. Banks and retailers bear the brunt of these expenses, which include transportation, storage, insurance, and distribution. The popularity of physical money also blocks opportunities for economic growth and financial stability that deeper inclusion provides.

Consumers and small businesses that exclusively use cash lack transaction records, which means they cannot access credit, loans, or insurance, or earn interest on their savings accounts. Access to credit can help small businesses grow and create jobs. Savings, insurance, and medical aid provide a buffer against financial shocks, helping households and businesses stay resilient and seize opportunities.

Cash is far more popular than digital payments. Despite an estimated 20 million South Africans paying via a bank app at least once over a three-month period, more than 35 million South Africans paid in cash during the same period.

Why cash still dominates

Cash remains king primarily because South African alternatives are not always practical or well understood.

For some communities, cash is the only option. In the informal economy, which accounts for 19,5% of all employment in South Africa, some businesses cannot meet standard account opening requirements, which keeps them cash-only. So consumers in these areas need cash to buy groceries, even if they want to use digital transactions.

Despite the high number of smartphones in South Africa, data costs and unreliable rural connectivity limit access, as evidenced by 25,3% of citizens being digitally excluded. This affects both consumers and merchants, as card terminals need stable connections. Where the internet is unreliable, cash is the only option.

Consumers tend to ignore the cost of cash, but are conscious of the charges associated with digital and card payments. The R1,50 they pay to swipe is easier to see than the R10 they need to spend for a taxi when they withdraw physical money.

Concerns about banks taking money and a general distrust of financial institutions are among the reasons for cash’s popularity. This suspicion may stem from a lack of understanding of how bank charges work and the general processes of financial institutions.

How financial inclusion is expanding

Despite cash being deeply embedded in daily life, there are opportunities to move South Africa towards greater financial inclusion, enabling banks to build trust with their customers.

While deepening expansion into financial services is a significant undertaking, progress is already underway.

PayShap is a digital competitor to physical money, matching the immediacy of cash while providing greater safety and flexibility.

Similar systems have been successful in emerging economies, such as Brazil. Pix led to 95% of the adult population opening accounts by 2025, supported by zero transaction fees and strong uptake among small businesses.

PayShap's transaction fees are being reduced over time and could potentially be eliminated. Adoption is also growing, with 44 million PayShap transactions being recorded in August 2025. With Request-from-Point-of-Sale, small businesses can receive real-time digital payments. This could start shifting the informal economy away from cash as more merchants open accounts to stay competitive.

Challenges to accessibility are being addressed by increased competition from Mobile Virtual Network Operators, which are reducing data costs. Additionally, government initiatives like South Africa Connect, which aims to achieve 100% broadband access for communities and Government facilities, particularly in rural areas, are also reducing the digital divide.

There is also evidence of demand for longer-term financial products when they feel accessible and relevant; for example, 48% of South Africans have a funeral plan. That kind of uptake shows what is possible when products match real needs and feel trustworthy.

Payments Future: How Bank CIOs Can Lead the Next Decade of Payments

Inclusive payments require practical execution across rails, pricing, and consumer adoption. Electrum partners with enterprise banks and retailers, giving us a unique perspective on the payments landscape.

We have pulled our insights into 'The Way Forward: South Africa's Payments Future'. Download our latest research report to inform your strategy.