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South Africa Country Report

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  • Published Date: August 2021

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 CARDS AND PAYMENTS 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 payments 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.
  • This 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

Appendices: South Africa Payments Data Tables

Appendix I: Demographics and the economy

Demographic and economic indicators
Data table 1: Demographic and economic indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 2: Ownership of key consumer devices: 2015-2020. Estimates and forecasts to 2024.
Data table 3: Internet usage by population: 2015-2020. Estimates and forecasts to 2024.

Appendix II: Payments environment

Data table 4: Access points: 2015-2020. Estimates to 2021.
Data table 5: Account penetration: 2015-2020. Estimates and forecasts to 2024.
Data table 6: Consumer payment: trends 2015-2020. Estimates and forecasts to 2022.
Data table 7: B2C e-commerce payment methods: 2015-2020. Estimates and forecasts to 2022.

Appendix III: Cards market

Data table 8: Total cards payment metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 9: Contactless cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 10: Credit card numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 11: Total credit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 12: Credit cards profitability indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 13: Debit cards numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 14: Debit cards metrics: 2015-2020. Estimates and forecasts to 2024.

Appendix IV: Profit pool

Data table 15: South Africa market profit pool: 2015-2020. Estimates and forecasts to 2024 including 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).

Appendix V: Card networks

Data table 16: Networks' credit card market shares: 2015-2020. Estimates and forecasts to 2022.
Data table 17: Networks' credit card data numbers: 2015-2020. Estimates and forecasts to 2022.
Data table 18: Networks' credit card billed volume: 2015-2020. Estimates and forecasts to 2022.
Data table 19: Networks' number of credit card transactions: 2015-2020. Estimates and forecasts to 2022.
Data table 20: Networks' average credit card transaction value: 2015-2020. Estimates and forecasts to 2022.
Data table 21: Credit card interchange fees by network: 2015-2020. Estimates for 2021.
Data table 22: Networks' debit card market shares: 2015-2020. Estimates and forecasts to 2022.
Data table 23: Networks' debit card data numbers: 2015-2020. Estimates and forecasts to 2022.
Data table 24: Networks' debit card billed volume: 2015-2020. Estimates and forecasts to 2022.
Data table 25: Networks' number of debit card transactions: 2015-2020. Estimates and forecasts to 2022.
Data table 26: Networks' average debit card transaction value: 2015-2020. Estimates and forecasts to 2022.
Data table 27: Debit card interchange fees by network: 2015-2020. Estimates and forecasts to 2022.

Appendix VI: Key retail banks and issuers

Data table 28: Key credit card issuers market shares by credit card numbers: 2017-2020. Estimates and forecasts to 2022.
Data table 29: Key issuers market shares in credit card outstandings: 2017-2020. Estimates and forecasts to 2022.
Data table 30: Key debit card issuers market shares by debit card numbers: 2017-2020. Estimates and forecasts to 2022.

Appendix VII: Acquirers and processing

Data table 31: Merchant acquirer credit card market share: Estimates for 2021.
Data table 32: Credit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 33: Merchant acquirer debit card market share: Estimates for 2021.
Data table 34: Debit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 35: Credit card issuer/issuing processor relationships
Data table 36: Credit card acquirer/acquiring processor relationships
Data table 37: Credit card issuing processor market shares by card numbers: Estimates for 2021.
Data table 38: Credit card acquiring processor market shares by the number of POS transactions: Estimates for 2021.

Appendix VIII: Online acquiring

Data table 39: Online merchant acquirer market share. Estimates for 2021.

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

Verisk 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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