South Africa’s central bank is set to implement the most substantial reform to the country’s cash system in over four decades, introducing a centralised cash-management utility, white-label ATMs, and stricter regulations to make physical currency cheaper and more accessible. This initiative, known as the Cash Smart Strategy, forms part of the broader Payments Ecosystem Modernisation Programme aimed at balancing digital growth with the continued role of cash in everyday transactions. With cash still accounting for about two-thirds of transaction volumes, the reforms address inefficiencies in a system where physical money remains essential for many, particularly in rural and low-income areas.
Cash in circulation exceeds R180 billion, equivalent to roughly 2.5 per cent of gross domestic product, according to Bloomberg. Managing, transporting, and securing this cash cost approximately R90 billion last year, with consumers bearing the brunt through fees and indirect charges. Crime contributes around 13 per cent of these expenses, highlighting vulnerabilities in the current fragmented setup. As reported by Business Insider Africa, low-income users often face transaction costs up to five times higher than urban counterparts, underscoring the need for equitable access amid rising digital adoption.
The strategy draws inspiration from the Netherlands’ Geldmaat model, a joint venture by major banks that operates a unified, interoperable ATM network. Under the proposals, existing bank-owned ATMs would transfer to a co-owned utility involving banks, retailers, and potentially other stakeholders, enabling full interoperability. This would allow customers from any bank to use machines at minimal or no cost, significantly reducing fees while optimising cash distribution based on demand forecasting. The central bank anticipates that such measures could lower overall costs and eliminate indirect subsidies currently benefiting a handful of private firms.
Digital payments in South Africa continue to expand rapidly, with card payments projected to exceed R2.9 trillion in 2025, as noted by GlobalData. However, cash usage is expected to decline by 30 to 40 per cent as the country approaches digitisation levels seen in India, Brazil, and the European Union. The reforms aim to manage this transition without exacerbating burdens on cash-reliant communities, ensuring physical funds remain viable alongside innovations like PayShap instant payments.
Tighter oversight will extend beyond banks to include licensing for cash-in-transit operators, retailers, and certain payment providers, with a draft framework due early next year. Major grocers such as Shoprite and Pick n Pay, which recycle substantial cash volumes annually, are being engaged to take stakes in the utility and operate as licensed wholesalers. This could streamline supply chains, reduce crime risks, and enhance efficiency in high-volume retail environments.
The South African Reserve Bank has already presented the plan to commercial banks and will consult industry experts from January 2026, with full implementation potentially spanning three years. While changes may impact bank revenues and the central bank’s seigniorage income from issuing notes, proponents argue the long-term benefits include lower operational costs and greater safety.
Overall, the Cash Smart Strategy represents a forward-thinking response to South Africa’s evolving payments landscape, where digital growth coexists with the enduring importance of cash for financial inclusion. By fostering collaboration and efficiency, it seeks to create a more resilient ecosystem that benefits consumers, businesses, and the broader economy.