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South Africa moving toward a "cashless society"

By Staff Writer
South Africa moving toward a "cashless society"

Justmoney.co.za, South Africa's online guide to money has found that more and more South Africans are making use of credit cards over cash and the website has seen significant levels of credit card applications over the first two months of the year.

Commenting on a report by the National Payment System Department, Justmoney.co.za's Editor Andy Gilder said that the increase in the use of credit cards in the report was in line with the increased activity on the web.

"We were certainly seeing an increase in the number of applications for credit cards, and this report confirms that the South African trend is moving towards ‘plastic' -whether it be credit or debit cards. We thought for some time that the increase in applications for credit cards was purely a result of the increased barriers to entry to a number of other forms of credit, but use statistics like these show people are not only applying for more credit cards, but are using them more frequently and to purchase more expensive items."

"Credit cards are fantastic tools when used correctly and they can provide the consumer with invaluable short term relief towards month end or through a difficult patch when used correctly. They are also a comparatively safe and convenient way to purchase goods and they negate the need for major cash withdrawals." says Gilder.

The report, detailing information gathered from major retailers about their different methods of payment, showed a steady increase in credit card use over 2008 and stats for October alone showed value settled in credit cards was as high as R9.1billion in that month. Visa alone accounted for R5 billion of this.

"Although the concept of a cashless society is still something that many South Africans might view as an unfamiliar concept; products such as reloadable prepaid debit cards have been around since late 2008 and they give broader access to unbanked consumers." says James Clarke, Head of Regional Marketing, Visa Sub-Saharan Africa.

FinScope's research indicated that 60% of South African adults had a bank account in 2007, up from 51% in 2006, and 47% in 2005. Visa feels that products like these mentioned above can be attributed to increasing South African‘s access to affordable banking and ultimately bring us closer to becoming a cashless society.

"Although a "cashless society" is not yet entirely possible, indications are there that it could be the way of the future. Consumer payment options are increasing and almost every retailer will now offer several forms of plastic payment options - from store cards to debit cards, and even petrol stations now offer the opportunity to pay with your debit card." Says Gilder.

He added that new payment options on the horizon could see South Africa shift to a high tech payment system.

"With a throng of mobile offers on the horizon and South African's mobile penetration, it won't be long before we start tossing out the cards too - I'm convinced cell phone payments will be the next major change in banking in this country."

To manage the increase in applications for credit cards on the site, Justmoney.co.za has recently launched a new comprehensive credit card calculator.

"As the market becomes more competitive, we are finding that people are more interested in comparing credit cards before they decide on the correct card. Our new calculator takes into account things like reward schemes and air mile benefits and ensures that we can cater for every users needs. We've built the new calculator with input from users and our card providers and we are confident that our offering gives an entirely accurate comparison of the credit card market." 

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