Is cash still king?
This is a sparkling question that almost does protest against digital transformation when thinking about it.
It was Wandile Mnguni, Product head of commercial Transact Pillar at FNB who detailed a more informed view of the landscape currently when it comes to the cash question. He was at FNB’s Payment Update breakfast which highlighted some much-needed innovations to meet consumer needs.
While cash remains relevant due to the persistent need for convenience goods such as a pie, sandwich purchases at a fuel station, making payments for smaller items, and other payment requirements, cash remains relevant despite data suggesting there has been a decline on cash reliance post-Covid and in the past three years.
While the digital age has ushered in a wave of cashless transactions, cash continues to hold a significant place in our economy, however, due to an increasing reliance on different payment methods, cash may be on the decline.
Mnguni paints a more palatable outlook by stating that cash is still relevant in certain spaces, but the data has highlighted a declining baseline post-2019.
“We see that over time the reduction of cash is prevalent. There is a downward decline of cash over the past three years,” he said.
So why does cash really remain relevant in an age that has seen technological payment methods like smartphones and watches being able to make payments?
The first obvious answer is the reliability aspect, where cash transactions are less susceptible to technological failures or disruptions compared to digital payment methods.
Accessibility: Cash is accessible to everyone, regardless of their socioeconomic status or technological literacy. This is currently one of the barriers in certain geographical areas.
Privacy: Cash transactions offer a higher level of privacy compared to digital payments, which can leave a digital trail.
Tangibility: Physical cash provides a tangible sense of wealth and can be a valuable tool for budgeting and financial planning.
Emergency Preparedness: Cash can be a lifeline during natural disasters or other emergencies when digital infrastructure may be compromised.
However, it’s important to note that the dominance of cash is waning in many parts of the world. The rise of digital payments and mobile banking has made it easier than ever to conduct transactions without physical currency.
Nonetheless, cash remains a crucial component of our financial systems, and its importance is likely to endure for many years to come.