14 September 2023
Industry9 Minutes, 15 Seconds read

An overview of the payments ecosystem in South Africa

With a fast-growing population and increasing internet penetration, South Africa's payments landscape has seen a significant transformation in recent years. Here, we explore the factors influencing the adoption of digital payments in South Africa, evaluate the most popular and growing payment methods and more.

Lucille Wilcox, Content Marketing Manager

Historically, South Africa – like many emerging markets – has had a strong reliance on cash as the primary and preferred payment method. However, with a fast-growing population and increasing internet penetration, the country’s payments landscape has seen a significant transformation in recent years.

According to a McKinsey report on the future of payments in Africa, growth in digital payments is likely to be uneven across the continent and will depend on infrastructure readiness, e-commerce penetration, mobile money penetration and regulation, among other factors.

“Some countries – notably Egypt, Ghana, Kenya, Nigeria and South Africa – have managed the transition to digital faster than others and either have or are rapidly developing the appropriate infrastructure and relevant policy frameworks to deliver a sophisticated electronic-payments system.”

The report adds it’s likely that around half of future electronic payments revenue will come from these five countries.

Here, we’ll explore factors influencing the adoption of digital payments in South Africa specifically, evaluate the most popular and growing payment methods and look at the systems in place that are enabling a fertile environment for online payments to gain traction. 

A well-developed banking sector

South Africa’s banking sector plays a crucial role in the payments ecosystem, with major banks like Standard Bank, First National Bank, Absa, Nedbank, Capitec and others offering an increasing range of financial products and services. With access to savings accounts, credit cards and mobile banking apps and a growing offering of digital products, South African consumers are generally able to easily conduct online financial transactions.

According to The World Bank, approximately 84.11% of the population (more than 40 million South Africans) have a bank account. The percentage of South Africans over the age of 15 with accounts has also risen sharply from 54% in 2011 to 84% in 2021.  

The World Bank’s Global Findex (2021), a report that gathered data on global access to financial services for 123 countries, found that the combination of traditional bank accounts and phone-based financial services was a catalyst for the steep increase. 

Challenger and digital banks like TymeBank, Discovery Bank and Bank Zero, as well as competition from giants like MTN with its MoMo (Mobile Money) mobile banking app, have also contributed to the rise in digital financial activity in the country.

However, there are important nuances to these statistics. Despite being a highly banked population, the majority of bank account holders still withdraw cash for day-to-day transactions. Earlier this year, Stitch conducted a survey exploring South Africans’ preference for cash, and found that the reasons for cash preference ranged from convenience, to safety, to an attempt to avoid perceived high fees associated with digital channels. Additionally, accounting for those without bank accounts, The World Bank highlighted issues associated with low levels of education around digital financial services and a lack of valid identity documents as further barriers preventing a bigger move away from cash. 

The expansion of alternative payment methods

The proliferation of alternative payment methods in South Africa, offered by local and international fintech players and telecom companies, has played a pivotal role in the growth of digital payments. 
getty-images-spOxj8FH0_g-unsplash3x2 (2).png
Some of the key alternative methods taking shape include:

Mobile money in South Africa

While mobile money is present in South Africa, despite strong adoption in other African markets, penetration has been relatively low. Due to more advanced banking systems and tighter regulation, mobile money providers are met with challenges. One potential reason for this is that current South African legislation classifies mobile money wallets as banking services, necessitating compliance with strict banking regulations. In order to offer mobile money services in the country, it’s essential to partner with licensed banks or financial institutions acting as sponsors, making it more difficult for mobile banking services to operate independently.  

It could be argued that the value proposition for mobile money isn’t as strong in South Africa, where banking penetration is high, as it is in countries like Kenya, where M-Pesa retains an impressive market share, offering access in a market with lower banking penetration rates and acting as a complement to more informal banking services like SACCOs.

Contactless payments

South Africa currently leads the charge in contactless payments adoption on the continent, according to Visa and Discovery Bank’s SpendTrend23 report, which analysed the country’s spending habits.

Lineshree Moodley, Country Manager for Visa South Africa, explains that adoption of near field communication (NFC) payments initially gained traction during the COVID-19 pandemic in an effort to reduce physical contact, but has since grown exponentially thanks to a more seamless user experience.

Moodley noted that from 2021 to 2022, 72% of all face-to-face transactions globally were contactless and that in South Africa, more than 50% of all digital transactions were contactless, adding that, “Contactless and mobile payments are really reaching new highs across consumers in South Africa.”

At POS, small business owners and entrepreneurs are also accepting digital payments at increasing rates - including via contactless card transactions - thanks to the growth of accessible hardware targeted toward SMEs. One example is Yoco, which offers one of the most affordable card terminals in the South African market, and processes over $2 billion in payments annually for over 200,000 small businesses.

Scan-to-pay apps: the enduring value of QR codes

Facing competition from the rise in contactless payments, scan-to-pay apps like Zapper and Standard Bank’s SnapScan still play a role when it comes to optionality in how South Africans choose to pay using their mobile phones. Standard Bank has acknowledged the convenience of SnapScan purely as a mobile payment application has seen a marginal decrease since contactless payment users tended to coincide closely with SnapScan users.

Recognising the changes in merchant acquisition, SnapScan has plans to expand its offering with additional in-app features and other standalone value propositions. Standard Bank explains, “We are continuing to build out standalone value propositions such as peer-to-peer wallet functionality, in-app ID verification and withdrawal of wallet funds to a bank account, in-app electricity and bill payment, scan and pay on parking tickets, and other hyper-convenience features.”

Similarly, Zapper has acknowledged the benefits and convenience associated with NFC over QR code scanning, but notes, “There are use cases that QR can address that NFC simply can’t, and there are additional value-added services that can be coupled with QR such as consumer insights, loyalty and vouchering that NFC can’t offer.” What’s more, emerging retailers require an NFC-enabled point-of-sale card reader, adding a barrier the QR-scanning solution bypasses with its tap-on-phone capability built into its app.

On the customer side, NFC is also not available on many budget smartphones, leaving a large portion of the population unable to make use of contactless payments. Conversely, QR technology has been widely incorporated into lower-end phones with a camera. QR payments can also be made while a terminal is offline or has no network connection. Additionally, prohibitively high data costs in the country contribute to the endurance of scan-to-pay app usage.  

Digital wallets in South Africa

Digital wallets have gained steady traction in the country, offering the ability to securely store various types of sensitive information, including credit and debit cards, gift cards, boarding passes, tickets and IDs. While functionalities depend on the specific platform, most – if not all – enable contactless in-person payments, peer-to-peer payments and online payments at checkout, among others.

In the payments realm, digital wallets typically require card information to be entered before the wallet contacts the card network to attain a token that is securely saved on a user’s phone. Some of the more popular digital wallet apps in South Africa include Apple Pay, Google Pay and Samsung Pay.

Launched in March 2021, Apple Pay offered Apple users contactless payments in-store, via apps and other online platforms, with users also able to receive and send money to friends and family using the Messages app.

In late September 2022, Google Pay officially went live in South Africa, enabling in-app, online and in-person contactless payments from Android mobile phones, tablets or connected watches.

Echoing previous sentiments, Mastercard stated that 52% of South African consumers have used a smartphone and digital tap-and-pay platforms in the past year, with the trend set to continue, as 60% of surveyed South Africans reported they’re likely to tap a smartphone to pay in the coming year, citing increased comfort and security.

Like Apple Pay, cardholders of major partner banks in the country – FNB, Discovery Bank, Investec, Standard Bank, Absa and Nedbank – are able to add their details to their wallet in order to make easy contactless payments.

Google South Africa Country Director Alistair Mokoena said in a statement, “Security and privacy are built into every part of Google Wallet, making payments safer and allowing people to transact seamlessly and with confidence throughout the day. This will allow users to make transactions using a virtual card number (a token).”


In part due to rapidly rising inflation rates and increased costs of living, many South Africans – particularly Millennial and Gen Z populations – are finding new ways to expand their credit without resorting to credit cards or loans by leveraging buy-now-pay-later (BNPL) products.

The surge in the BNPL industry first came about during the peak of the COVID-19 pandemic, with an attractive value proposition of interest-free repayments on installments. Some of the more well-known South African BNPL players include PayFlex, MoreTyme (TymeBank), Happy Pay and Float, among others.

According to data from KenResearch, South Africa’s BNPL market had a CAGR of 64% between 2019 and 2022, and a forecasted CAGR of 35% between 2022 and 2027. The volume of transactions in the market is also on an upward trajectory, with projections of 26% CAGR between 2022 and 2027.

Despite high market growth predictions, there are concerns about the lack of regulation within the industry. Since BNPL products don’t fall under the scope of South Africa’s National Credit Act and are not regulated by the National Credit Regulator, the industry is currently self-regulating, which could prove problematic for businesses and consumers. The industry’s future is highly dependent on how these challenges will be addressed and whether inevitable regulation might impact growth. 

How fintechs like Stitch enable payment innovation in the country

At Stitch, we work with enterprise businesses across industries  – from e-commerce, to financial services and money transfer apps, to insurance and lending businesses, telecos, bill payment providers, scan-to-pay platforms and more – to make it easier, simpler and more secure for them to offer their customers a seamless payments experience.

With a variety of payment products including Card, Pay by bank, Manual EFT, Debit Order, Cash and Payouts, and more to come, our reliable infrastructure and robust API enables enterprises to streamline payment operations, boost retention and increase conversion to help them perform better. 

Streamline your payment operations and scale faster

Request a demo
Get started

Build and scale your financial solutions, faster

Link and verify users’ financial accounts for easy access to financial data, and seamless and secure payments and payouts, all through a single API.
By clicking submit, you’re agreeing to ourTerms of Service