In my experience, as a resident of South Africa, coins have become more useful to me than banknotes.
Why? Because within South Africa’s massive informal economy (which accounts for almost 30% of the total economy) are people who offer their services in exchange for small tips in the form of coins. They include petrol attendants who fill up your car, people who carry your groceries to the car and take away your trolley, and people who guard your car while you’re shopping.
It’s a long list, which means you should always have plenty of five-rand (R5) coins at hand to tip these people for their various services. R5 is worth $0.30 and three of these coins buy a slab of chocolate.
These days, R5 is about right. Occasionally, I give a tip of R10 (the lowest banknote denomination) to a petrol attendant who checks water and oil and cleans the windscreen. But usually it’s R5.
However, while coins still have their use, I hardly need banknotes anymore, given that anything can be purchased with a card or code-scan, or a bank transfer. Plus, in a country like South Africa, it’s not safe to walk around with too many banknotes.
Cashless payments in South Africa are, like most countries, on the rise. From Ghana to Kenya, the 59 billion cashless transactions carried out in Africa in 2020 are expected to nearly triple by 2030 to reach 172 billion, according to a report by PricewaterhouseCoopers (PwC).
But the question is: are informal traders in danger of going bust in a cashless world?
While analysts say the cashless move has boosted sales for small businesses, those dependent on loose change say the shift has hit their earnings.
‘There has been about a 50% reduction in donations since the mall installed cashless ticket payments. Many people just don’t want to carry money anymore,’ said a busker in a Johannesburg shopping centre, speaking to www.context.com.
‘Drivers want to tap and go. This is bad for us as tips don’t always come when people use cards,’ said Lebogang Ramathoka, an attendant at a Johannesburg petrol station, adding that tips had earlier made up more than 30% of his monthly wage.
Recently, some petrol stations have started letting customers add a tip to their card payment, said Ramathoka.
‘There should be an option on the card machine that asks them if they want to add a tip for us. It’s less awkward than us having to ask them,’ he said.
However, Ramathoka hopes the surge in cashless payments will not do away with cash altogether.
‘People are on tight budgets, and a coin here or there is easier to give than swiping on a card,’ he said. ‘If there are no coins to give I fear we will struggle.’ For the time being, most petrol stations I’ve been to don’t offer a system for adding a tip to a card payment. On one occasion, when we asked the attendant if we could add a tip, he said he needed to go and get a different card machine, as only one machine on the premises offered this function. So, for the moment, it seems to be a somewhat complicated process, with limited uptake, that is anything but user- friendly.
Coins therefore remain the most common means of paying tips to service providers like car guards and petrol attendants. But the decline in the use of cash is creating a huge hole in the earnings of these providers, and this hole is not being filled by mobile or card payments.
