News

ATM demand growing with gov't benefits card use in S Africa

September 11, 2013

The rising use of debit cards as a payment mechanism by the South African Social Security Agency has had a sizable impact on the country's ATM use and has further entrenched cash as the preferred payment method among consumers, according to Cape Town-based IAD Spark ATM Systems.

"SASSA cards now represent 14 percent of our transaction volumes, up from nil just eighteen months ago," said Spark managing director Marc Sternberg. "The introduction of these cards represents a huge injection of new customers into the formal banking and ATM system."

The SASSA card allows beneficiaries to access social benefits — i.e., retirement, disability, war veterans, dependent care and other government aid — from anywhere in the country using traditional banking channels, including ATMs.

Cardholder demand has driven "significant" demand for convenient ATM services, Sternberg said, citing a record 496 new Spark ATM installations in the first eight months of 2013.

"A majority of Spark's ATMs were installed in rural and peri-rural areas and the strong demand for cash by the previously unbanked is reflected in the withdrawal volumes we have recorded on these rural ATMs, particularly on SASSA transactions," he said.

According to Sternberg, the flood of almost 10 million new SASSA cardholders into the system has resulted in the peak ATM withdrawal day for South Africa's entire ATM industry moving from the last Friday of the month to the first day of the month, which is SASSA grant day.

Cash volumes in the country continue to grow at a significant rate, Sternberg said. Recent figures from the South African Reserve Bank show that total cash in circulation in South Africa has increased by 13 percent year-over-year.

A recent FinScope survey found that the introduction of the new SASSA card system also contributed to a significant increase in the banked population, particularly at the bottom of the income pyramid, where ATM/debit card usage increased from 52 percent in 2011 to 61 percent in 2012.

The Spark Cash Index for August revealed an 8.48 percent year-over-year increase in average cash withdrawal values to R471.81 ($47.49). This also reflects a growth rate of 1.97 over July.

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