Factors influencing the adoption of payment technologies in the informal sector in South Africa

Abstract

Literature purports that various innovations that use QR, Bluetooth and NFC technology to facilitate digital and mobile payments have emerged recently in South Africa. Besides these advancements, cash payments are still dominant in the informal sector with approximately 96 percent of payment transactions in 1.5 million informal traders being conducted in cash. This is despite a strong interest for alternative digital and card payments displayed by consumers. A gap evidently exists between the informal sector and customers in the informal sector. There is an opportunity to assess why, despite the significant advancements in payment technologies, cash is still a favoured method of payment in the informal sector. This research sought to shed light upon the factors influencing the adoption of payment technologies in the informal sector. Using a qualitative research approach, thirty semi-structured interviews were conducted with informal traders and their customers in the cities of Johannesburg and Cape Town in South Africa. Thematic data analysis was used through identifying common patterns. The data was analysed by means of an inductive thematic analysis. The findings indicate a moderate understanding of payment technologies and financial products in general. An openness to alternative methods of payment was displayed through adoption of some of the payment technologies currently in the market like e-wallet. This indicated that the informal sector does not have a payment technology adoption problem but instead suffers from a lack of relevant technological availability.