Cash and Cards Compete to Dominate Payments Ecosystems
South Africa had an estimated population of 59,308,690 as of the middle of 2020, according to UN data. Based on Worldometer elaboration of the latest UN data, South Africa had a population of 59,786,064 as of February 21, 2021, with 66.7% living in urban areas, mainly Cape Town, Durban and Johannesburg. The median age of the population is 27.6 years. South Africa had approximately 160.0 million active internet users as of January 2021, according to Data Reportal.
The low internet, banking, and smartphone penetration rate means South Africa still faces high challenges to establish an e-commerce market. The average annual revenue per paying user in South Africa amounted to only $98 in 2020, according to the PPRO Report. Most cross-border e-commerce purchases by South Africaian shoppers are of products from China, Germany, and the United States.
In 2020, most South Africans shoppers prefer to pay with cards, followed by cash, bank transfers, and other payment methods. For cashless payments, the three big players are Visa, American Express, and Mastercard.
According to IMF data, South Africa had a gross domestic product of $351.35 billion in 2019, which declined to $282.56 billion in 2020 due to the pandemic. As the economy continues to recover, South Africa's GDP is expected to expand to about $317.19 billion in 2021.
Internet & mobile phone trends
According to Statista, the majority of internet users in the country were aged 25-29 years old (15.73%) as of 2020. According to Datareportal, there were 38.19 million internet users in January 2021, which had increased by about 1.7 million (+4.5%) from 2020, with an internet penetration rate of 64.0% in January 2021. Meanwhile, 60% of the population had smartphones in 2020.
According to the PPRO Report, 69% of South Africans had bank accounts in 2020, but only up to 9% of them were credit card holders.