Will South African street vendors go bankrupt in a cashless world?

BUSINESS


For more than a decade, musician Thomas Nhassavele has busked next to the parking payment machine in Johannesburg’s Rosebank Mall, where drivers used to leave their change in his guitar case.

But Nhassavele’s profits have dwindled in the last year or two as a growing number of mall visitors use cards to pay at the machine’s new cashless payment system, some muttering a quick apology before heading to the shops. Departures.

There has been about a 50% reduction in donations since the mall installed cashless ticket payments. Many people just don’t want to carry more money.

Thomas Nhassavele

“There’s been about a 50% reduction in donations since the mall installed cashless ticket payments. A lot of people just don’t want to carry money anymore,” he said, playing his guitar.

Cashless payments in the country are on the rise as customers are drawn to the convenience, safety and hygiene of tapping a card or scanning a QR code in post-COVID and sometimes crime-plagued South Africa at the expense of the informal economy.

While analysts say the cashless movement has boosted sales for small businesses, those who rely on loose change — street performers, street vendors or tip-dependent gas station attendants — say the change has affected their Profits.

From Ghana to Kenya, Africa’s 59 billion cashless transactions in 2020 are expected to nearly triple by 2030 to 172 billion, according to a report by PricewaterhouseCoopers (PwC).

“We have to accept that technology will change things, but I’m afraid this cashless world will kill our income,” Nhassavele told the Thomson Reuters Foundation as a customer dropped an R1 coin into his guitar case.

BARRIERS TO BANKING

Smartphone penetration in South Africa has grown from 48% to 78% in the last four 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 the World Bank . .

This lays a solid foundation for cashless payments, said Michael Thomson, creative director of SnapScan, a contactless QR code payment system that serves 70,000 merchants nationwide and has 3 million downloads.

But there are still barriers to increasing acceptance.

While women in South Africa are more likely to have bank accounts than their peers in other countries in the region, lack of financial education and discrimination prevent them from accessing the full potential of banking resources and opportunities, the University of Johannesburg found. .

Navigating cashless systems typically requires a bank account, a cell phone number, Internet access, and digital literacy; not all are available to those without identification documents or smartphones, including refugees and the homeless.

READ: Small businesses must adapt and switch to digital commerce

“The formal payment system and its innovations tend to be used by higher-income markets rather than lower-income or underdeveloped sectors of the economy,” said Chantal Maritz, director of PwC’s strategy and payments team.

Nearly 30% of South Africa’s economy is informal, according to the World Economics data site.

Of South Africans with bank accounts, 25%, or 8.3 million people, are underbanked, meaning they cannot access full banking services, Maritz said.

“Although digital payments do not require a bank account, such street vendors, buskers and beggars would require a digital store of value containing their digital money to make and accept payments,” he said. That could include an electronic wallet linked to a bank.

IS CASH KING?

Another group of workers feeling the cashless pinch in South Africa are petrol station attendants who fill customers’ cars with fuel, clean the windshield and then, if the customer wants to pay with a card, they bring the payment terminal to the driver.

Petrol attendant Lebogang Ramathoka poses for a ph

Petrol attendant Lebogang Ramathoka poses for a photo during his break at a service station in Johannesburg.

“Drivers want to tap and go. This is bad for us as tips don’t always come when people use cards,” said Lebogang Ramathoka, an employee at a Johannesburg service station, adding that tips used to account for more 30% of your monthly salary.

Recently, some gas stations have started allowing customers to add a tip to their card payment, Ramathoka said.

There should be an option on the card machine that asks them if they want to add a tip for us, it’s less awkward than having to ask them.

thank you ramathoka

“There should be an option on the card machine that asks if they want to add a tip for us, it’s less awkward than having to ask them,” he said, sipping a drink at a table behind the gas station during his break. .

A host of other payment options aimed at popularizing cashless payments have been launched in recent years, from First National Bank’s eWallet that allows customers to send money to a cell phone number, to the card machine wireless from Yoco and QR codes from Zapper and SnapScan.

Yoco is a portable South African card machine used by 250,000 South African businesses that connects to a phone via bluetooth and offers free unlimited 4G data and WiFi connectivity, charging less than 3% commission on payments.

Both Yoco and SnapScan say that car guards (people who watch parked cars to make sure they aren’t stolen) with bank accounts have started giving drivers Yoco and SnapScan cashless payment options.

Both Yoco and SnapScan say that car guards (people who watch parked cars to make sure they aren’t stolen) with bank accounts have started giving drivers Yoco and SnapScan cashless payment options.

Timothy, a waste picker who also cleans streets at traffic lights in Johannesburg, said his cell phone was his saving grace during the Covid-19 lockdowns, as he could ask contacts to send him cash via an e-wallet.

“It’s the reason I survived,” he said, asking to use only his first name to protect his identity.

Ultimately, said SnapScan’s Thomson, “easier access to (the) identification documents and proofs of address” needed to obtain bank accounts, digital wallets and SIM cards, would also open up cashless payment systems to marginalized groups. .

But gas station attendants like Ramathoka hope the rise of cashless payments won’t wipe out cash entirely.

“People have tight budgets, and a coin here or there is easier to give than a swipe of a card,” he said.

“If there are no coins to give, I am afraid we will fight.”


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