South Africa’s Reserve Bank is preparing a sweeping redesign of the country’s cash ecosystem, signalling the most far-reaching changes in decades. The plan includes setting up a central cash-management entity, converting existing ATMs into white-label machines and strengthening regulation around how physical money is handled, with the aim of lowering costs and improving access.

Even as electronic payments expand, cash still plays a dominant role in the economy. Around R180 billion circulates through the system — roughly 2.5% of GDP — and cash transactions make up close to two-thirds of all payment volumes nationwide.

The price of keeping cash in circulation is substantial. Transporting, safeguarding and processing banknotes cost an estimated R90 billion last year, expenses ultimately borne by consumers. Criminal activity alone contributes about 13% of these costs.

The Reserve Bank’s proposed Cash Smart Strategy is intended to ensure that physical money remains available to low-income households and rural communities, many of which have limited access to digital payment tools and often pay transaction fees up to five times higher than those faced by affluent urban users. Officials say the changes — the most significant since ATMs were first introduced more than 40 years ago — are designed to reduce these pressures.

As South Africa’s payments landscape becomes more digital, the central bank expects cash usage to decline by between 30% and 40% once local adoption levels align with those seen in markets such as India, Brazil and the European Union.

“This represents a fundamental shift for the entire industry,” said Pradeep Maharaj, head of the South African Reserve Bank’s Payments Ecosystem Modernisation Programme.

A cornerstone of the strategy is the creation of a shared cash utility jointly owned by banks, retailers and other stakeholders. The proposed structure draws inspiration from the Netherlands’ Geldmaat system, a collaboration between ABN AMRO, ING and Rabobank that runs a single, unified ATM network.

Under the new model, the utility would forecast cash demand and manage distribution, effectively ending the roughly R480 million indirect subsidy currently flowing to a small group of private firms that store and circulate cash on the Reserve Bank’s behalf.

A ‘worthwhile shake-up’

Most ATMs are currently owned and operated by banks such as Capitec and FirstRand. These machines would be transferred into the new entity and rebranded as white-label ATMs, allowing customers from any bank to withdraw cash at little or no charge.

“With full interoperability, fees could be reduced to almost zero,” Maharaj said. While banks may see some loss of revenue, he added that lower operating costs are expected to offset the impact.

The proposed overhaul has drawn measured support from analysts. Jannie Rossouw, an honorary professor at the University of the Witwatersrand’s business school, said the changes would not be without expense but could be justified if they succeed in making cash safer, cheaper and easier to access. He noted that a decline in cash circulation would also reduce the Reserve Bank’s seigniorage income — the interest earned on deposits held in exchange for banknotes.

Beyond structural changes, the central bank is considering widening regulation beyond traditional lenders. This could include introducing operating licences for cash-in-transit firms, retailers and certain payment service providers, with a draft regulatory framework expected early next year.

The Reserve Bank also plans to hold talks with major retailers such as Shoprite and Pick n Pay, which together recycle up to R100 billion in cash annually. These groups could potentially take stakes in the new utility and operate as licensed cash wholesalers with direct access to banknotes, a move that could support their operations.

The proposal has already been presented to banks, with broader industry consultations scheduled to begin in January. Full implementation of the strategy could take up to three years.

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