The evolution of banking and payment solutions in South Africa
Payment solutions and the banking sector in South Africa have come a long way over the last four hundred odd years. The Europeans brought with them the practices of barter, and bills. Banks emerged at the end of the eighteenth century, but were the privilege of the few. Today things are remarkably different – and for the better, too. In a previous blog we touched upon the global evolution of money and payment solutions. In this blog, we’re going to zoom in and focus on how payment solutions and banking have evolved in South Africa.
Before the seventeenth century, there was no need for barter in South Africa
The original tribes people of South Africa would have had little need for payment solutions. They foraged off the land and were self-sustaining. They didn’t even need barter, but were introduced to the practice when the first colonialists arrived. The settlers would exchange goods like rice, copper and tobacco for livestock and salt. Among themselves, the Dutch exchanged rixdollar and stiver coins, which were the currency of British Ceylon (aka East India) at the time.
From bills to banks, pounds to Rands
In 1782, the governor of the Cape was forced to introduce bills, as there simply weren’t enough coins to go round — that’s according the the Reserve Bank’s account. The first state bank in the country was established in 1793, the Lombard Bank, based in Cape Town. Private banks began emerging in 1837, and as trade spread over the country, more and more institutions were established. For much of the nineteenth and twentieth centuries, pounds sterling were the national currency, until the Rand was introduced in 1961.
Over the course of a decade the banked population in South Africa has almost doubled
Today, South Africa ranks 12th out of 140 countries in the 2015-2016 Global Competitiveness report’s financial sector development criteria. South Africa offers some of the most innovative financial services in the world, with 75% of the adult population having access to a formal bank account in 2014 compared to only 46% in 2004 (according to data from FinScope). This increase in the number of South Africans being financially served is partly due to the introduction of the SASSA MasterCard in 2012: According to Finscope’s 2015 research, 30% of South African adults come from households that receive a form of government grant and are banked because of the SASSA MasterCard.
Mobile money is facilitating the growth in financial inclusion
While 75% of the population is banked formally, a further 5% is serviced by formal non-bank financial products or services, according to the FinScope 2015 survey, including mobile payments solutions like M-Pesa and other mobile money accounts (discussed in more detail in our blog about mobile money in Africa).
ZipZap offers your business more freedom and potential for growth
Another example of an innovative payment solution that harnesses the power of mobile is Paycorp’s ZipZap mobile payments app. Using a smartphone and card reader (connected via Bluetooth), entrepreneurs and small businesses can transact anywhere their smartphone has 3G connectivity – and battery, of course. The payment is processed exactly like a traditional credit card machine, and cardholder data is just as secure, as we adhere to the most stringent and most recent PCI DSS criteria. This payment solution gives businesses more freedom and flexibility with where and how they transact, creating more opportunities for innovation and business growth. What’s more, all past transactions can be viewed online.
If you think ZipZap could help you boost your business and offer your customers more convenience, download the ZipZap brochure.