The future is cashless – this is what our Wirecard experts regularly report on this blog. But as we also find other perspectives exciting, we have asked various experts with different backgrounds for their insights, experiences and opinions about cashless as part of our "Cashless Think Tank" interview series (click here to read all parts published so far).
Today we continue with Herman Singh who, among many other activities, works as an executive, director, chairman for business transformation and adjunct professor at the Graduate School of Business of Cape Town University, and is an intimate connoisseur of the payment scene in Africa.
African payment expert Herman Singh
Herman, from your perspective, what are the most important advantages of cashless payment?
In Africa, cash handling is as costly as elsewhere in the world. Collection, transport, securing, depositing of cash is expensive, and there is also an elevated security risk due to transit heists or blowing up ATMs, which unfortunately are not uncommon in South Africa.
Therefore, for merchants and consumers alike, the key advantage of cashless is lower friction as moving around physical money is a lot slower, clumsier and also riskier than paying digitally.
Finally, paying with cash allows transactions to remain outside of the formal economy and so they might be untaxed and unmonitored. The data is also not accessible for credit scoring and working capital financing.
What are the most important factors that are helping cashless to become more prevalent worldwide and in Africa?
Globally seen, the removal of friction and a higher speed in payments are the most important factors, especially for smaller transactions. Other advantages are lower fraud and less money laundering.
"The Collection, transport, securing, depositing and securing of #cash is very expensive, and cash also leads to an elevated security risk" - African payment expert @futureherman #gocashless #CashlessThinkTank #WirecardBlog
Looking at Africa in particular, mobile financial solutions, in short MFS, help with inclusion because they are free to get, free to keep and free to use. In addition, they work on all phones. So they are ubiquitous and very empowering. This then provides access to savings, loans and insurance all via the wallet to everybody. Also it makes it much easier for people to receive remittances from their families simply via mobile peer-to-peer payment.
How do you think cashless payments will be made in 2030?
I believe that future consumers will buy more and more in popular online shops like Jumia or Souk – who are the Amazon of Africa, so to say – where they can do so with any authorization. Today this mainly happens via card or smartphone, but in the future it will be much more frequent biometrically, e.g. with authorization via fingerprint, palm or face.
In addition, I think we will make a big move to QR-code-based payment, like Alipay and WeChat Pay in China. It is the most simple and obvious solution. But it will be interoperable across different networks like in Indonesia, so it can be used by various payment system providers at every merchant.