South Africa’s First National Bank (FNB) on Wednesday called on public sector institutions to switch to digital transactions instead of handling cash.
The FNB said while the country ended the use of cheques at the end of 2020, institutions like public schools, municipalities, public hospitals and licensing departments have not seen a decline in cash transactions.
“Apart from the obvious risks of having a lot of cash on your premises, cash handling is an expensive process, especially when having to secure and manage large sums,” said CEO of FNB public sector banking Sipho Silinda,”and excessive cash management expenses can significantly increase any organisations cost of doing business.”
The provincial head of FNB Public Sector Banking Anrie Spangenberg said it is costly to transport cash.
“Transporting cash is fraught with dangers, not least the growing incidence of cash in transit heists taking place across the country and as these specialist transport companies have to invest more money into increasing their own security, those costs are passed on to their customers,” Spangenberg said.
“When you add bank handling and cash deposit fees to this equation, it becomes clear that accepting cash is simply not a financially prudent way of doing business any more especially for public sector institutions that need to maximize their revenues in order to maintain the levels of service expected of them,” said Spangenberg.
Organisations and customers accepting cash have to keep a record of all payments they make or receive and this adds significant administration and risk to this record-keeping requirement.
She said it involves complex capturing, filing, allocating and reconciling, adding to the administrative burden and increasing the potential for human error along the way.
Silinda said digital payments are safer, more convenient and more secure than cash transactions. The private sector has increased the use of digital payment channels. Enditem