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South Africa Cards & Payments Market Report
- Published Date: August 2021
CARDS AND PAYMENTS MARKET IN SOUTH AFRICA
A comprehensive overview of the cards, payments and consumer banking market in South Africa, with clearsighted commentary backed by relevant data.
Technology plays an increasingly important role, with digital banking growing fast and new banks challenging incumbents purely through digital offerings.
This payment landscape could have its own domestic network in the near future, with the central bank consulting with stakeholders about creating a domestic card network.
There is also an increasing regulatory push to reduce cash use in the country, and the emergence of new technologies such as QR codes, SoftPOS, mPOS provided by non-banks is set to drive down the cost of payment acceptance for merchants and increase access to cashless payments.
What you can learn from this South Africa payments report:
How regulation and competition are combining to drive change.
Why cash usage is under increasing pressure.
Which challengers are breaking the established lenders' grip.
How opportunities are growing fast thanks to mobile.
Where issuers are now focusing in a changing economy.
SOUTH AFRICA COUNTRY REPORT | KEY FACTS
- South Africa is the continent's most industrialised economy, but its development has been hindered by severe income inequality and elevated levels of unemployment.
- Four banks have long dominated retail banking: Standard Bank, First National Bank, Absa and Nedbank. However, Capitec has challenged this hegemony in recent years.
- The central bank has been to the fore in encouraging payment innovation. QR code payments and Open Banking are rising, while real-time payments have been available since 2006.
- The acceptance footprint is being expanded using alternatives such as QR codes, mPOS and SoftPOS (acceptance apps).
- Cash though remains dominant, with a large portion of workers receiving their salary in cash and many more using cards purely to withdraw cash.
- The average adult made 38 card purchases in 2020, with Covid causing a small decrease in total card purchase volume.
- The South Africa credit cards market has been challenged by a decline in demand, deflating profits and shrinking the number of credit cards from 8.4 million in 2015 to 7.1 million in 2020.
- Lending margins are low, with interest rates capped at a margin above the funding rate. Credit card issuers rely on fee income to drive profitability.
- Retailer credit cards are a significant feature of the market. There were an estimated 16 million such cards in 2020, with an average outstanding balance of $143 per account.
- South Africa's acquiring is mainly performed by banks, responsible for 93 percent of POS billed volume. Competitive pressure in the acquiring market is low.
South Africa Payments Research | Report Contents
TABLE OF CONTENTS
Demographics and the economy
Payments environment
Cards market
Mobile payments
Profit pool
The networks
Key retail banks and issuers
Acquiring and processing
Online acquiring
Regulatory and other cards market information
South Africa Country Report Data Tables
(All 2015-24F unless otherwise stated)
1: Demographic and economic indicators.
2: Ownership of key consumer devices.
3: Internet usage by population.
4: Access points: 2015-21E.
5: Account penetration.
6: Consumer payment trends 2015-22F.
7: B2C e-commerce payment methods: 2015-22F.
8: Total card payment metrics.
9: Contactless card metrics.
10: Credit card numbers.
11: Total credit card metrics.
12: Credit card profitability indicators.
13: Debit card numbers: 2015-2020.
14: Debit card metrics: 2015-2020.
15: Profit pool: credit card numbers, billed volumes, outstandings, interest incomes, net interest revenues, merchant revenues, card fee revenues, other non-interest incomes, total revenues, net credit losses, operating expenses, total expenses, pre-tax profits, merchant service charges, rollover rates, APR, net credit losses to outstandings, operating costs to revenues, ROA (pre-tax profits to outstandings).
(All 2015-22F below unless otherwise stated)
16: Networks' credit card market shares.
17: Networks' credit card data numbers.
18: Networks' credit card billed volume.
19: Networks' number of credit card transactions.
20: Networks' average credit card transaction value.
21: Credit card interchange fees by network: 2015-21E.
22: Networks' debit card market shares.
23: Networks' debit card data numbers.
24: Networks' debit card billed volume.
25: Networks' number of debit card transactions.
26: Networks' average debit card transaction value.
27: Debit card interchange fees by network.
28: Key credit card issuers market shares by credit card numbers: 2017-22F.
29: Key issuers market shares in credit card outstandings: 2017-22F.
30: Key debit card issuers market shares by debit card numbers: 2017-22F.
31: Merchant acquirer credit card market share: 2021E.
32: Credit card merchant service charges: 2015-24F.
33: Merchant acquirer debit card market share: 2021E.
34: Debit card merchant service charges: 2015-24F.
35: Credit card issuer/issuing processor relationships: -
36: Credit card acquirer/acquiring processor relationships: -
37: Credit card issuing processor market shares by card numbers: 2021E.
38: Credit card acquiring processor market shares by the number of POS transactions: 2021E.
39: Online merchant acquirer market share. 2021E.
South Africa Country Report | Selected Extracts
Demographics and Economy
The country possesses Africa's third-largest and most industrialised economy, accounting for about 13% of the continent's GDP. Nonetheless, despite its successes, South Africa has one of the highest levels of income inequality in the world.
Payments Environment
South Africa's payment systems are among the most developed compared to other regional markets. There were an estimated 50.1 million payment cards in 2020, of which 43 million were debit cards.
Cards market
In 2020, some 1.7 billion payment card purchase transactions were made in South Africa, with an average value of $52. The country has the largest payment cards market in sub-Saharan Africa in terms of cards in circulation.
Mobile Payments
Mobile payments in the country have failed to take off at the same rate seen in markets such as Kenya. This is a result of a highly developed financial services sector and a relatively high banked population.
Profit Pool
In 2020, pre-tax profits reached an estimated $408 million, a contraction of 7% compared with the previous year. As the pandemic developed in 2020, banks cut back on higher-risk lending.
Card Networks:
Major credit card brands are issued and accepted in South Africa. Debit cards are seeing an increase in their share at the POS. Billed volume at the POS with debit cards increased from 41% in 2015 to 48% in 2020.
Key Retail Banks and Issuers
Despite the high level of concentration, retail banking here has proven to be dynamic, with new and smaller, more digital-centric banks successfully challenging the Big Four's market share.
Acquiring and Processing
South Africa's acquiring is mainly performed by banks, responsible for an estimated 93% of POS billed volume during 2021. Both issuing and acquiring processing are typically conducted in house by South African issuers and acquirers.
Online Acquiring
The pandemic fuelled online shopping, lifting South Africa's B2C e-commerce sales by an estimated 69% in 2020 to more than $4 billion. The categories that experienced the highest growth were clothing and groceries.
Regulatory and Markets Information
South Africa's financial services sector has a sound regulatory and legal framework with well-established domestic and foreign institutions providing a full range of services.
South Africa Payments Report | Entities Referenced
AA
Absa
African Bank
American Express
Amex
Ant
Ant Financial
Apple Pay
Avis
Bank Zero
Banking Association of South Africa
BankservAfrica
Bettr Finance
bidorbuy
BIS
BluMobi
BNP Paribas Personal Finance
Capitec
Checkers
Clicks
Competition Commission
Deloitte
Diners Club
Discovery Bank
eBay
eBucks
Edcon
Fasta
Financial Services Board
Firepay
First National Bank
FirstRand Bank
FIS
Fitbit Pay
Flutterwave
FNB
Foschini Group
Garmin Pay
Greenback
Grindrod Bank
Gumtree
HelloPay
iKhokha
Investec
KFC
Live Better Benefits
loot
Lululend
Makro
Mastercard
Masterpass
Mercantile Bank
Mobicred
MobiMoney
MoMo
Money Message
M-Pesa
MTN
MyGate
Mzansi
Naspers
Nedbank
NiftyCredit
Old Khaki
Old Mutual
OLX
PASA
PayFast
PayFlex
PayGate
Payment Association of South Africa
PayPal
PayU
PocketBiz
POS plus
Postbank
RCS
Retail Association of South Africa
RMB Private Bank
SAA
Samsung Pay
SARB
SASSA
Shell
Shoprite
Shyft
SnapScan
SoftPOS
South African Airways
South African Banking Risk Information Centre
South African Reserve Bank
South African Social Security Agency
Specsavers
Spot Money
Standard Bank
Takealot
Truworths
Truworths Financial Products
Tutuka
TymeBank
uCount
Ukheshe
UnionPay
V+
Virgin Money
Virtual Card Services
Visa
Vodacom
VodaPay
Voyager
WhatsApp
Woolworths
Woolworths Financial Services
Worldpay
Yoco
Zando
Zapper
Zip Co
MORE AFRICA PAYMENTS REPORTS
Reports deliver invaluable market and competitor intelligence on payments cards, e-money, acquiring/processing, retail banking, and consumer credit throughout the Middle East. Analysts and researchers use primary and secondary source data and conduct in-depth interviews with senior industry executives and Middle East experts.
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