Despite tracking slightly lower than in previous years, cash remains important for the South African economy, according to the inaugural PayInc Cash Index.
“Although levels are 3,7% lower than a year ago and cash supply has eased, PayInc’s reporting metrics indicate that the demand has remained steady, highlighting the resilience of notes and coins – particularly for lower value transactions,” says Shergeran Naidoo, head of Stakeholder Engagements at PayInc.
The PayInc Cash Index is the newest addition to PayInc’s stable of economic indices that takes a closer look at the cash ecosystem’s structural shifts over past years involving banks, non-banks, and retailers.
“As the cash ecosystem becomes increasingly complex, the new index draws on data from PayInc’s Independent Cash Management Service (ICMS) and its role as the Cash Independent Administrator (Cash IA) to track the quarterly trends in the cash industry within the digitising payments landscape,” explains independent economist, Elize Kruger.
Inventory, supply and demand – a new approach to measuring cash in South Africa
Unlike other reports, the PayInc Cash Index provides a unique perspective on South Africa’s dynamic cash value chain by measuring three key areas: Cash Inventories; Supply to Access points; and implied Demand, explains Kruger.
Cash Inventory indicator
According to the South African Reserve Bank, notes and coins in circulation have levelled off since 2020. At R180-billion in 2024, in nominal terms, it equates to about 2,5% of GDP. However, a notable moderation is evident in real terms. Additionally, commercial banks have reduced their cash holdings over the same period.
“While reflecting a gradual move away from cash usage, the data is also an indication of the efficiency improvements for cash demand management in the value chain,” says Kruger.
This is supported by the Cash IA’s findings. Established in 2012 as Cashlogix and acquired by PayInc in 2024, the Cash IA helps to optimise cash availability across the industry.
“Ultimately, efficiency gains and structural changes in the industry should not be mistaken for a decline in cash demand in the economy,” explains Kruger.
Supply indicator
Today, cash is accessible not only through banks and their ATMs, but also a growing network of non-bank providers such as independent ATM deployers, cash aggregators, retailers, and merchants. This expansion reflects innovation and structural reform, not a decline in the importance of cash for banks or consumers.
“The supply indicator in the PayInc Cash Index tracks the supply of cash to banks and a limited number of non-bank actors across multiple access points including branches, ATMs, and point-of-sale cashback,” explains Kruger. The data is reliable but incomplete as not all non-bank activity is recorded in the current framework.
PayInc’s ICMS and its role as Cash IA have been central to optimising cash supply. While a gradual decline in cash supply has been noted, this signals efficiency gains and the growing role of non-bank institutions in distribution – over and above a gradual lightening of cash usage in the economy. Industry trends confirm this shift with fewer bank-branded ATMs, more independent networks, and wider cashback and deposit options.
Demand indicator
What happens to cash after it’s withdrawn remains uncertain. With more non-bank players now part of the ecosystem, the flow and velocity of cash are harder to track and available data is incomplete. To better understand this, the PayInc Cash Index compares the total value of notes and coins in circulation with the cash held by the SARB and commercial banks, explains Kruger.
The difference, called “other cash”, represents money held by individuals and non-bank providers. While this data doesn’t yet distinguish between the two groups, it offers a credible view of cash demand in the wider economy and will serve as a key demand indicator in the new PayInc Cash Index.
“What makes the PayInc Cash Index unique is that it captures the entire cash value chain – from how cash is issued and distributed to how it’s spent,” explains Kruger. “By tracking inventory, supply, and demand together, the index provides a holistic view of South Africa’s cash ecosystem and how it is evolving alongside digital payments.”
ATM declines do not necessarily indicate reduced cash demand
The accessibility to cash is gradually being reshaped by the growing number of non-bank players providing cash services in an ecosystem formerly dominated by banks.
“Therefore, the decline in ATM transactions does not necessarily indicate a drop in cash demand,” says Kruger. “Instead, it reflects the broadening role of non-bank providers, such as retail stores, in offering cash access, driven by shifts in the broader cash supply chain.”
However, the growing adoption of PayShap and the sharp rise in EFT transactions – from 406,9-million in 2010 to 1,13-billion in 2024 – reflect a clear shift from cash to digital payment solutions.
“The data shows that while cash retains a strong foothold in the economy, the ecosystem around it is modernising, improving efficiency and access,” says Naidoo. “Yet rising demand for digital payments continues to redefine the landscape.”