As the season of giving approaches, research suggests that South Africans who give to charitable causes prefer donating cash rather than transacting online with a credit or debit card.
According to a survey published in the SA Giving 2019 Report, cash donations are the most common form of giving, with 73% of respondents confirming that they used this method.
However, with the digitalisation of the economy and the transformation of various financial services, will our propensity for cash-based charitable donations also change?
“Some examples can be gleaned from Kenya, where a deeply-rooted tradition of community fundraising received a modern update in 2012,” says Leana de Beer, Chief Operations Officer at Feenix, an online crowdfunding platform.
De Beer explains that M-Changa, also a digital crowdfunding platform, in partnership with a peer-to-peer mobile money service, allows Kenyans to send, receive and track donations to those who need a helping hand.
The crowdfunding service took hold there for several reasons, not least because of the cultural embeddedness of community self-help practices known as harambee. In much the same way, and modelled in the spirit of Ubuntu, Feenix was established to help students in South Africa to raise funds to pay their tuition fees.
“Feenix connects students with a community of would-be donors, providing them with a safe and reliable way to donate to a socially beneficial cause such as access to education,” says de Beer. “Not only is it secure and convenient to transfer money, but we also have an SMS short code and SnapScan option to make things even simpler.”
Online payments can play a role in social impact. Financial technology (fintech) that simplifies the transfer of money between people are considered by many development agents to be a positive tool in the fight against poverty. This sentiment is based on the logic that financial inclusion makes people more resilient and boosts their overall economic well-being.
A survey conducted by the Central Bank in Kenya found that 83 % of the population now has access to formal financial services largely due to the proliferation of mobile technology. In 2006, a mere 14 % of Kenyans had bank accounts, creating a market for the expansion of mobile phone-based services from money transfers to microloans.
In South Africa, the tendency to use cash is also evident in the way people shop. “Research has found that a lack of trust in online payment systems has apparently contributed to the slower uptake of e-commerce in this country,” says de Beer.
Nigeria, South Africa and Kenya accounted for nearly half of Africa’s estimated 21 million online shoppers in 2017 but they still lag behind developed markets.
“A study produced by the South-African-based Industrial Development Think Tank (IDTT) found that trust in online payments remain a concern for consumers even though improved credit card protection measures have reduced incidents of fraud. This lack of trust can be eliminated through educating people about the digital economy and encouraging them to use safe and secure channels for online payments,” adds de Beer.
Online shopping, crowdfunding, and mobile money transfers serve different markets and are motivated by various factors, yet share a commonality.
"These services have evolved with the digitalisation of the economy. As people become familiar with and adapt to the changes, our propensity to use cash may wane," de Beer concludes.