A detailed look into South Africans transaction habits from cash and card spend over the lockdown period has revealed that the value of ATM withdrawals is on the rise while credit cards are being stored away.

“As a service to the South African economy and decision makers, BankservAfrica has used its data to track consumers’ transactions with card at point-of-sale (POS) terminals or with cash that is accessed via Saswitch linked ATMs during the lockdown period,” says Shergeran Naidoo, head of stakeholder Engagements: BankservAfrica.

“Overall, after taking inflation into account, BankservAfrica’s data for card and POS transactions shows consumer transactions increased by 3,6% year-on-year in June. This is unlike the declines of over 53% in real value for April and -9,2% in May.”

The movements over these months reveal some underlying trends on how South Africans are choosing to transact between cash and card.

“The total value of ATM withdrawals increased by nearly 28% in real terms between June 2020 and June 2019,” says Naidoo.

BankservAfrica picks up all interbank ATM transactions processed via Saswitch at different bank ATMs. This massive increase came about despite the re-implementation of the interbank ATM fee in June, after it had been waived while the country was in level 4 and level 5 lockdown.

The company believes this increase could reflect the massive stimulus via the South African Social Security Agency (Sassa) grants that were increased during May and June as both months saw Saswitch ATM transactions increase well above the norm.

It also seems Sassa grant holders withdraw cash almost immediately after it reflects in their bank accounts.

It might also be a reflection of cash being withdrawn to fund transactions that were prohibited during the lockdown of the economy, such as the purchase of alcohol and cigarettes from illegal suppliers.

ATM withdrawals also reached their highest share of the combined use of card and ATMs in the consumer market.

The last three months reflected a change in trend where “cash” has gained market share again. This is contrary to the long-term market trend.

“The lockdown and the Covid-19 crisis have had some very unexpected outcomes in the way consumers are spending,” says Mike Schüssler, chief economist at economists.co.za. “Some may be due to ‘illegal’ transactions that require cash while some may be a result of employed people having less money to spend or having lost jobs.

“At present, there are too many uncertainties regarding the key factors behind these observations; all we can do is report on the trends and speculate as to its likely causes.”

Most interesting, however, is the fact that, despite an increase in the real value money withdrawn from ATMs, there has not been a material difference in the number of transactions from a year ago. This is likely due to the fact that the same beneficiaries are receiving the extra money from the coronavirus Sassa grant increases.

However, the pay-out of extra Sassa grant money will cease at the end of October. This will most likely lead to a decline in ATM transactions, both from a volume and a value perspective.

“One could expect that the growth in value will revert closer to inflation levels and will drop back to low single digit growth,” says Schüssler.

“The overall number of transactions via combined debit and credit cards decreased by 16,3% while the value decreased by 6,8%. The real value decreased by an estimated 9,3% for all cards,” says Naidoo. The decrease was mainly the result of the lowered use of credit cards, which were the hardest hit.

“This seems to indicate that employed consumers are afraid to spend or have experienced a salary cut. Despite the massive UIF Covid-19 Temporary Employee Relief Scheme (TERS) pay-outs, it appears consumers are using their credit cards far less than before or have moved to debit cards to minimise their credit expansion,” says Schüssler.

“While there was an overall decrease for consolidated card usage, there was a noticeable difference for the value of goods purchased with debit and credit cards. For debit card transactions, there was a 15% upward movement while for credit cards, this took a slide of 12,3%,” says Naidoo.

He adds: “Over the last three months, card transactions have declined by nearly 30% on average. One is inclined to look at this massive drop in the use of cards to understand that most of the pain of the lockdown and Covid-19 crisis has been felt by employed individuals and those at the bottom of the employment ladder.”

South Africa has never seen a drop like this in card transactions, which have increased in market share for decades because of the safety and convenience of card that outweighs that of cash.

“We could see card transactions revert to its usual growth over the next few quarters. However, one must be wary of the result that large job losses can have on the use of cards at POS terminals and this may result in less retail spending for a long time,” says Schüssler.