South African consumers remain under financial pressure, spending less and even dipping into savings for everyday expenses.
These are among the finding from the new SpendTrend25 report from Discovery Bank and Visa, the third annual collaborative report of South African consumer spending habits based on an in-depth analysis of credit card spend data. Combining their datasets and analytics, SpendTrend25 tracks how consumer spending habits have evolved between 2019 and 2024 among Discovery Bank clients and the broader South African population.
Enhancing the findings of the SpendTrend25 report, Visa and Discovery Bank, this year, commissioned an independent public survey among a set of South Africans to capture more detailed perspectives on the use of cash and digital payments, use of subscription services, banking security perceptions and the influence of AI on financial behaviour.
Discovery Bank CEO, Hylton Kallner, says: “Our latest comprehensive report identifies shifts in financial behaviour for practical insights into how much people spent, what they spent on, and how they spent it. We’ve also supplemented the quantitative analyses with detailed consumer survey data to gain a deeper understanding of the drivers of the trends that we’re observing.
“For example, while we’ve seen a material shift to digital payments in our spend data, this is backed up by consumer preferences whereby over 80% of South Africans surveyed are choosing cards or digital payments over cash whenever they can, and the same percentage engage more with their credit card rewards and benefits than they did a year ago as they focus on value-based spending.
“And, while digital banking has increased client financial safety, three out of five South Africans are more worried about their banking security than a year ago.
“It’s findings like these that provide rich, granular insights into consumers’ needs and perceptions that can shape strategies and focus areas when designing products and solutions for clients,” Kallner adds. “Over time, SpendTrend insights have become remarkably valuable in identifying how best to offer more relevant, personalised banking that puts our clients in control and provides real rewards that promote financial wellbeing. It’s also reinforced our view that digital banking security is going to be a key consumer focus point in future.”
Lineshree Moodley, country head for Visa South Africa, comments: “South African consumers are undoubtedly feeling the impact of rising living costs, which is driving a significant change in spending habits. Our research, in collaboration with Discovery Bank, shows that people across all income levels are making spending decisions with careful planning and strategic use of financial tools.
“The rapid growth of accessible and affordable online and digital payment methods is particularly noteworthy, alongside these advancements, there are numerous tools and strategies available to help them navigate these challenges.
“Despite the pressures they face, we hope that the insights from SpendTrend25 will foster meaningful discussions and inspire targeted actions, empowering consumers to not only manage, but thrive in this dynamic economic landscape.”
Key findings from the SpendTrend25 survey include:
- Consumer card spend has slowed, despite lower inflation.The prime rate cut in September 2024 offered some relief, but recovery has been slow and led many to rely on value-based spending. In 2024, average spend growth was flat even as inflation fell from 6% to 4,4%. Consumer card spend growth trailed inflation by five percentage points, suggesting that factors beyond prices – like income constraints and rising expenses – affected spending habits. Cities like Bloemfontein, East London and Gqeberha had faster growth in spending, while cities like Johannesburg, Cape Town, Durban and Pretoria experienced more muted growth in spend.
- Consumers are using their long-term savings for short-term expenses. While credit cards are more pervasive as a result of convenience, rewards and functionality, overall spending on active cards remained steady. South Africans are however looking for alternatives to relieve their financial pressures beyond short-term credit. One way is through the two-pot retirement system. Research amongst Discovery Corporate and Employee fund members found that they are using their retirement savings for expenses such as home or car costs, paying-off short-term debt, school fees and daily expenses. Among Discovery Bank clients, two-pot withdrawal rates were inversely correlated with Vitality Money status with higher withdrawal rates for high-income earners with a low Vitality Money status than lower-income earners with a higher Vitality Money status, highlighting the importance of smart financial habits and sound financial planning.
- Groceries, retail, travel, eating out, and fuel account for over 70% of total consumer spending. Groceries take the top spot for most, while high-net-worth individuals dedicate a larger share of their spend to retail and travel. Johannesburg residents spend a lower share on groceries and more on shopping and eating out or takeout compared to those in Durban and Cape Town. In comparison, people in Bloemfontein, East London and Gqeberha spend a greater share on food and fuel but less on travel, eating out and takeout. As more people return to the office, fuel spending has surged. After a 4% decline in 2023, average fuel spend per active card grew by 5% in 2024, marking a sharp 9 percentage point increase.
- Busy lifestyles and the need for convenience increasingly influence consumer spending. Spending on eating out and takeout grew by 12% in 2024, outpacing growth in grocery spend (8%), with demand for convenience shaping consumer habits. Online grocery shopping in South Africa is still on the rise, with spend up 15%, while in-store grocery spend has grown by just 6%. A positive insight is that the shift towards online grocery shopping has not compromised consumers’ health priorities. Discovery Vitality data shows online grocery baskets contain a 30% share of heathy items and in-store grocery baskets a 27% share of healthy items. When it comes to prepared food, spend on dining out is growing faster at 13% than ordering takeout online at 10%. This indicates that grocery shopping is seen as a convenient task to do online, while eating out is a social experience.
- Virtual cards are growing in popularity as South African consumers prioritise safety and convenience. Up to 45% of respondents in the consumer survey use virtual cards, driven by increased security, convenience, and rewards. VisaNet data supports this trend, showing fraud incidents are six times lower with digital wallet transactions than with physical cards. Johannesburg residents use digital wallets for in-store purchases nearly twice as often as the national average, followed by Cape Town and Pretoria. Most major cities are ahead of the national curve in embracing these mobile payments.
- South Africans are travelling less internationally, but are purchasing more online from international platforms. Travel spend is returning to pre-Covid levels, but at a higher cost per trip. Although overall growth in travel spend slowed in 2024 compared to previous years, the post-pandemic recovery continues. Discovery Bank clients travel far more with up to 24% more spend on travel. They saved over R700-million on discounted flights, car hire, and accommodation through Vitality Travel, both locally and internationally, with top international destinations being the UK, Mauritius, Australia, the US, and the UAE. While growth in travel spend slowed, spend on international platforms increased significantly, outstripping in-store spend at international destinations.
- Omni-channel shopping experiences continue to grow both globally and locally. Internationally, consumers are embracing phygital shopping experiences, such as ordering products online and picking them up in-store. This trend is also emerging in South Africa, with 21% of local consumers favouring phygital shopping experiences like browsing online and buying in-store.
- The usage of cash is declining and being replaced by real-time, digital payments. The consumer survey showed that 67% of South Africans use cash only a few times a month or never at all, with over 84% choosing cards or digital payments whenever they can. Online shopping continues to grow across South African cities, with transactions increasing by an average of 5% from 2019 to 2024. Bloemfontein and East London led with 10% and 11% growth, respectively. As digital payments continue to increase, affordability influences payment choices, with expectations for real-time, faster, cheaper payment systems that do not compromise convenience. The SpendTrend25 consumer survey showed that 86% of consumers believe payments should be as cost-effective as possible, while 84% believe it is essential that payments reach recipients quickly.
- Online entertainment continues to surge. Spending on online entertainment is the fastest-growing category in South Africa, growing by 110% since 2023. Spending on online entertainment includes streaming services, sports betting, and event bookings. Discovery Bank clients spent more frequently and at higher values on event bookings than the broader market, with 20% growth in the average transaction value. This can be directly linked to their exclusive early access to concert and event tickets. Sports booking transactions, including paddle, have also grown across the country. Among Discovery Bank clients the number of sports booking transactions grew by 64%, and by 41% in the rest of the market. Discovery Bank clients played over 93,000 paddle games in 2024, 70% of them during the week.
- Access to a wide range of subscription services is growing among South African consumers. While subscription services were once dominated by streaming, by 2024, they have expanded to include artificial intelligence, sports bookings, groceries and eCommerce. AI subscriptions saw the highest growth in share of spend – growing over three times from last year. Discovery Bank clients are leading this trend, using AI services more than the average South African, with an AI subscription adoption rate of 160% of the market. This rise in interest highlights how quickly AI is becoming part of everyday life.