Introduction

The South African Reserve Bank (SARB), as part of its ambitious Payments Ecosystem Modernisation Programme (PEM), is pursuing a “Cash Smart Strategy.” While the detail of the strategy is still emerging, early signals suggest it will be just as far‑reaching as PEM itself.

Barry Röhrs, Malcolm Clingham, Scott Forster and Matt Sykes recently sat down for a conversation to step back from the immediate policy debate and look more broadly at the South African cash system – where it has come from, what pressures it is under, and what international experience suggests about the opportunities and risks involved in reforming such a critical part of the payments ecosystem.

Scott: Barry, there’s been a noticeable increase in regulatory focus on cash in South Africa recently. Could you start by giving some context on how the cash system actually works today?

Barry: At a high level, South Africa’s cash system plays a central role in the economy. Cash demand remains significant, particularly among lower‑income households, informal businesses, and across the retail sector. Somewhere around half of all payments are made in cash. This isn’t a market where cash has already collapsed or become marginal, but SARB is now seeking to actively reduce South Africa’s dependency on cash by opening up the payments ecosystem, expanding digital alternatives and driving their adoption through the PEM programme.

Structurally, the system has evolved into something like a two‑tier model. The wholesale layer – issuance, sorting, and redistribution – sees SARB, the major banks, and SBV (a JV between the banks to provide CIT and cash processing services) operate an historically efficient model. There is some market stress at this layer, particularly driven by commercial decision making.

The complexity sits at the retail layer of the system. Multiple banks, a small number of large cash‑in‑transit operators, independent ATM deployers, and increasingly powerful retailers all interact in a highly competitive environment. Margins are tight, costs are rising, and pricing power has shifted over time toward large customers.

The important context for the current regulatory focus is that this pressure is building without a dramatic fall in cash demand. The system still has to deliver, but the economics of doing so are becoming harder to sustain through market forces alone. It’s that pressure that likely influences SARB’s thinking and it’s current posture for action.

Malcolm: It seems that South Africa is at quite a crossroads.

Barry: It is. Now you’ve been doing a lot of work in other markets. Are there any markets in particular that might act as a guide for what we’re looking at here?

Scott: There’s no market you can copy directly, but several offer valuable lessons.

Australia is the most frequently referenced example, largely because reform came late. Cash usage declined steadily, but intervention only followed once parts of the supply chain were already under severe strain. Fixed‑cost economics caught up with the system, relationships between banks and service providers broke down, and options narrowed fast. The lesson there isn’t about the final structure, it’s about how delay turns reform into crisis management.

Brazil is particularly relevant for South Africa. The introduction of PIX has dramatically changed payment behaviour. From its introduction in late 2020 it is now described as the leading payment form in Brazil. And while PIX can facilitate P2P payments, merchant payments, and a range of cash withdrawal transactions, by all appearances there has been a material reduction in cash activity through banking and payments channels since PIX gained traction.

In Thailand, the Bank of Thailand embarked on an initiative to create “consolidated cash centres” whereby BOT cash centres were outsourced to private operators, who could also use the centres for their commercial activity. This provides a good example of aligning interests between regulators, banks, and operators.

The Netherlands illustrates the value of deliberate, consensus‑driven design. While the CIT sector had a number of bumps with exits (and re-entries to a monopoly), there was strong Dutch-style collaboration between the banks and the central bank. It is important to be mindful of a progressive shift over some 10 years, and even then there was disruption in the CIT sector.

As we speak to a growing number of central banks, CIT operators, and others around the world the learning is this: no market has got it perfectly right, there are many things that can go wrong, and for each market context is critical – the geographic, economic, demographic and relational context. The best approach is to draw on lessons as widely as possible, and then have a deliberate approach in applying those lessons, sensitive to the local context.

Barry: Australia is your home market. What specifically should South Africa be aware of from that experience?

Matt: The lessons from Australia are as much about how change unfolded, as where it ended up.

The early warning signs were visible years before anything visibly broke. Cash volumes had moved into a decline pattern by around 2012. There were exits from the market between 2014 and 2016 resulting in an increasingly competitive duopoly. On the surface the system appeared to be fine. However the combination of a highly concentrated supply side, along with a concentrated and economically strong customer base meant resulted in unhealthy competition for a shrinking pie, with real prices to customers falling through the floor. And due in part to the geography of Australia, it was challenging for either operator to take cost out of their infrastructure, so margins quickly eroded and moved to losses. When Armaguard and Prosegur merged to form an entity with 90% market share, they were incurring significant losses.

After the merger completed the cash system crisis came to a head. What became very apparent was how quickly relationships deteriorated, and this had a significant impact on closing pathways to resolve the crisis and move to a sustainable system. Australia is still not there, though the way things unfolded meant an inordinate amount of time and resource on the part of regulators, large customers and CITs to work towards a solution.

For South Africa, the message is clear: acting early is an advantage. But care is needed – what relationships need to survive to get to a working outcome, and which decisions are “one way doors” as Jeff Bezos likes to say. There are a range of competing interests, and forcing a path is a recipe for trouble. Once stakeholders believe outcomes are predetermined or assets may be stranded, collaboration disappears.

Barry: Looking more broadly, what are the key international lessons SARB should be considering as it embarks on its Cash Smart Strategy?

Scott: A few lessons show up consistently across markets.

First, cash systems fail for economic reasons, not ideological ones. They become unstable when incentives don’t align and fixed costs overwhelm shrinking revenue pools. SARB is right to focus on sustainability rather than waiting for visible failure.

Second, the success of system-level decisions rely on organisational and individual relationship health. Where one entity (whether a regulator or private business) charts a path without considering its wider impact, the damage can be long term.

Third, sequencing matters enormously. Governance, funding clarity, and incentive alignment must come before asset consolidation or utility designation. When that order is reversed, defensive behaviour takes over and the regulator’s role becomes much heavier than intended.

Fourth, specificity is needed when talking about utility models. We’ve found that even in markets where there is strong alignment and understanding, different people mean different things by “utility.” If a utility is to be established, it needs clarity on features such as: objectives, ownership, the role of all stakeholders, the impact on all stakeholders, commercial dynamics (direct and indirect), accountability, and transition pathways. We’re conscious that intentions around utilities in South Africa are still early in planning, but the sooner a framework of what the objectives are and what needs to be decided and planned under each component of the framework is documented and made public, the more likely there will be alignment. Vagueness breeds fear.

Finally, successful reform plans for multiple futures, not a single forecast. In a growing number of “low cash” countries we’re seeing usage flatten, not continue to fall. The timing and path of cash growth or decline is incredibly hard to predict and even harder to meaningfully influence. Stress testing the future state against upsides and downsides is critical to insulate against incorrect assumptions.

Matt: Bringing it back to South Africa specifically, what are the biggest opportunities and risks right now?

Barry: The biggest opportunity is timing. South Africa is engaging while the system still functions. Access remains broad, redundancy exists, and there is room to design thoughtfully rather than reactively.

There are also strong institutional foundations. The wholesale layer is stable, the payments modernisation agenda is progressing, and operational capability across banks, CIT operators, and retailers is deep. If aligned correctly, those strengths can support an orderly transition.

At the same time, the risks are real. Moving too quickly on untested assumptions is the most obvious one. If the demand shift is different to expectations, premature rationalisation creates fragility rather than resilience.

Mis‑sequencing is another major risk. Structural decisions taken before governance, commercial and funding models are settled encourage distrust and defensive positioning.

There’s also a trust dimension. Different actors currently read the direction of travel very differently – some see opportunity, others existential threat. If reform is perceived as producing predetermined winners and losers, collaboration will give way to legal and political strategies.

Ultimately, the challenge isn’t choosing between ambition and caution. It’s maintaining directional clarity while preserving structural flexibility.

Barry: Any final thoughts?

Malcolm: Cash reform always sits in an uncomfortable space. Change is easiest when systems are either clearly broken or clearly irrelevant. South Africa is in neither position, and that’s why current planning and events matter.

What SARB is attempting is rare: intervening while the system still works. That creates enormous opportunity, but also a narrow margin for error. The hardest part won’t be choosing the destination, it will be designing the journey – pacing change, testing assumptions, and keeping people engaged as reality unfolds.

If South Africa can sustain open dialogue, resist locking itself into a single future too early, and align economics with policy intent, it has a genuine chance to avoid the mistakes that others have made. Getting that balance right won’t be simple, but it’s far preferable to trying to fix things once the system is already under strain.

Barry: Absolutely.  I think, given South Africa’s dependency on cash, there is so much more at stake. So many South Africans still don’t have real alternatives to cash – the digital alternatives simply don’t fulfill their needs. So these changes are a good thing, and everyone in the industry needs to engage and participate actively in SARB’s forthcoming industry workshops. Dialogue is essential, it will contribute significantly to success, look forward to continuing our conversation.   

About the authors:

Barry Röhrs is the founder of Röhrs & Associates, a specialist advisory firm focused on financial services, cash systems, and broader business strategy. With deep experience across banking, payments, and the cash cycle, he is a long-standing advisor to industry participants and a recognised thought leader on the intersection of cash and digital innovation. His work spans strategy development, industry transformation, and advisory across emerging and developed markets, with a particular focus on practical, technology-enabled solutions that enhance the efficiency, resilience, and relevance of cash within modern financial ecosystems.

Malcolm Clingham is a Senior Advisor at CPT Group with more than four decades of experience across the global cash and banking landscape, spanning Africa, the Middle East, and international markets. Originating from a strong South African banking and cash management background, he has built deep expertise across the full cash value chain, including ATM and POS networks, cash-in-transit operations, and treasury functions. Malcolm has held senior leadership roles with major banks in the Middle East, including positions such as Group Head of Cash Management at National Bank of Bahrain and Bahrain Islamic Bank, and Head of Cash Management at Al Rajhi Bank, where he led large-scale network optimisation, cash digitisation, and branch transformation initiatives. He is particularly recognised for developing integrated cash and retail banking solutions, driving operational self-sufficiency, and applying global best practices to enhance efficiency and resilience across complex cash systems.

Scott Forster is a Director at CPT Group and a seasoned executive with over 20 years’ experience in the cash management industry, spanning operations, strategy, and business development. He has held senior leadership roles at Australia’s largest cash management organisation, where he led major transformation programs and oversaw key divisions including security logistics and fleet innovation. Scott has played a significant role in shaping the evolution of the cash industry in Australia and has contributed to broader industry leadership, including serving as Chair of the Asian Cash Management Association’s Security Committee, and is known for his pragmatic, best-practice-driven approach.

Matt Sykes PhD is a Director at CPT Group and an experienced advisor specialising in growth, strategy, and business transformation across the cash and payments ecosystem. He brings deep expertise in commercial strategy, M&A, and building and scaling businesses, including founding a banking solutions fintech and leading strategic initiatives within a large multinational. Over a 30-year career, Matt has completed more than $2 billion in transactions and combines strong academic credentials with extensive practical experience advising organisations on complex strategic and commercial challenges.