Visa issues 10 million cards in SA

This important milestone in Visa's history in South Africa coincides with a crucial time in the country's social and economic evolution, says Chris Winter, general manager and senior vice president for sub-Saharan Africa at Visa International.

"Research conducted in South Africa and all around the world shows that there is a clear correlation between the increased use of card and electronic payments and growth in an economy. This has significant implications for banking industry-wide initiatives like the national bank account, Mzansi. This is an entirely card-based bank account aimed at bringing 13 million people who currently do not have account facilities, into a formal financial services net," said Winter.

Even though a large portion of South Africa's population does not use card and electronic payments, there has still been dramatic growth in this transaction method since the turn of the century. Between 2000 and 2003, the average growth rate of debit cards issued was 137% per annum. In the same period, the amount of money processed using debit cards soared 234% per annum, indicating the growing popularity of these transaction methods.

As Mzansi and other projects to capture previously unbanked individuals take off, the benefits for the economy will become evident through the relationship between card usage and economic growth.

South Africa is one of many countries around the world facing the challenge of how best to draw unbanked individuals into the formal banking systems. According to Anne Cobb, President of Visa International for Central and Eastern Europe, Middle East and Africa (CEMEA), roughly two thirds of the world's population is unbanked - that equates to about four billion people who mainly use cash as their sole means of transacting.

"Cash-dependent countries tend to have low economic growth rates as currency stock held outside the system deprives banks of funds needed for credit expansion and monetary growth. Every currency unit that circulates as hard cash is a missed opportunity to invest, develop and grow an economy."

All evidence points to the fact that the more people who join the banking system, the more stable it becomes. This in turn has a positive and lasting effect on an economy, social reform and government efficiency. In South Africa, this has already had a very tangible benefit in the Allpay Sekulula card, a Visa Electron card available from Absa in four provinces, which permits pensioners and people receiving child and disability benefits to collect and safeguard their funds.

Payment cards have demonstrated around the world that they are a perfect low-cost tool to achieve the goal of bringing a greater number of people into the formal financial services sector and attracting more capital into the system. They are not only an efficient and rapid way of paying employees, but they overcome other challenges like the risk and security problems in transporting cash. In addition, South Africa's development of world-class anti-money laundering legislation like the Financial Intelligence Centre Act makes the use of card payments a more effective way to follow audit trails.

Despite the range of creative solutions that have already been launched by Visa International and its member banks to help expand the banking market, Winter says the organisation remains committed to finding new ways to service the unbanked.

"In South Africa's specific case, we are looking at broadening the card and electronic payment market by educating card holders about the various benefits and uses, and we are investigating increasing the number of terminals to execute transactions to improve accessibility for more South Africans."