SOUTH Africa is taking a major step toward digital transformation with plans to launch a free digital payment platform for its residents. The initiative is part of Operation Vulindlela’s second phase, which aims to modernise the financial sector and reduce reliance on cash, according to a report by Business Times.
The government is also exploring the introduction of a digital wallet, which could store important documents such as IDs and driver’s licences.
‘Digital payments and digital identification will be key areas of focus in this phase of Operation Vulindlela,’ said Rudi Dicks, head of the project management office in the South African Presidency.
Reserve Bank pushes for payment reforms
At the same time, the South African Reserve Bank (SARB) is working to modernise the country’s payment system. A new regulatory review could allow non-banking institutions, including fintech startups and payment platforms, to process transactions without requiring a traditional bank.
This move aims to increase competition in the financial sector, making digital payments more accessible, particularly in informal markets, where cash is still dominant.
Despite growing adoption of digital wallets and card payments, SARB Governor Lesetja Kganyago noted that many South Africans still prefer cash. SARB data reveals that nearly 50 percent of South Africans withdraw their entire salary upon receiving it, citing high bank fees, security concerns, and limited card acceptance in small businesses.
However, cash usage is gradually declining. In 2023, SARB reported a 0.8 percent drop in cash demand, indicating a shift towards digital transactions.
PayShap and digital wallets driving the shift
A major force behind South Africa’s cashless transition is PayShap, a real-time payment system introduced by BankservAfrica in collaboration with major banks. Launched in March 2023, PayShap enables users to send and receive money instantly using just a phone number instead of a bank account.
Since its launch, PayShap has processed over R46bn ($2.42bn) in transactions, demonstrating rapid adoption. Additionally, global digital payment platforms such as Apple Pay, Google Pay, and Garmin Pay are gaining traction in the country.
With these advancements in digital payments and financial regulations, South Africa is positioning itself for a more inclusive and efficient cashless economy. More details on the government’s digital transformation plans will be revealed when Operation Vulindlela’s second phase is officially launched.
