Mobile Payments Surpass Physical Wallets in South Africa

A recent report from Discovery Bank, in collaboration with Visa, sheds light on the growing trend of South Africans favouring mobile payments over traditional physical wallets, aligning with or surpassing adoption rates seen in other emerging markets and developed economies.

The SpendTrend24 report, drawing on data from Discovery Bank clients in South Africa and over 60 million Visa cards globally, highlighted the increasing reliance on mobile payments among South Africans. It also compared spending habits across major metropolitan areas – Johannesburg, Cape Town, and Durban – with global counterparts in similar markets.

Despite facing a challenging macroeconomic environment, South Africans exhibited resilience in their spending habits in 2023, with a notable increase in digital wallet usage, particularly through platforms like Apple Pay, which saw a 9% growth compared to the previous year.

The preference for digital wallets stems from their convenience and enhanced security features. Over 60% of South Africans prefer digital wallets due to their ability to eliminate the need for physical wallets, offer easy payment tracking, and provide added security against theft or loss.

Mobile wallets employ advanced security measures such as biometrics, encryption, and tokenization, making them safer for transactions compared to cash or physical cards.

The report revealed that residents of Johannesburg, Cape Town, and Durban displayed varying degrees of adoption of digital wallets, with Joburg leading the trend, followed closely by Cape Town and Durban.

Interestingly, South Africa’s growth in digital wallet usage outpaced global trends, showcasing a significant shift towards mobile payments in the country.

In tandem with the shift towards digital payments, online spending in South Africa surged five times faster than in-store spending in 2023, with South Africans embracing online shopping at a rapid pace, rivalling their counterparts in developed economies.

Despite the growing popularity of online shopping, South Africans still value physical shopping experiences, enjoying visits to shopping malls and comparing prices online before making in-store purchases.

Online grocery shopping emerged as a notable trend, with a growing percentage of grocery spending occurring online. This shift towards online grocery shopping was further accelerated by the availability of same-day delivery services, offering consumers greater flexibility and convenience.

Overall, the report predicts continued dominance of digital payments as consumers increasingly opt for contactless payment options and retailers integrate omnichannel sales strategies to offer a seamless shopping experience that combines the best of both online and in-store shopping realms.