Before the advent of the coronavirus pandemic, automated teller machines (ATMs) were Kenya’s most used means for getting cash on the go. More so for perhaps for every other country. But the Covid-19 storm more than changed financial habits, splitting the East African country’s ATM use in two.
A new report by Standard Chartered Plc, known as Africa’s largest bank, says that the use of these machines in Kenya has halved as an effect of the pandemic. Kenyans are now favoring contactless payment systems to protect themselves from contracting the novel virus.
The survey, which considered 12 markets in the country, reveals that the outbreak has accelerated the adoption of non-cash means of getting money and payments done.
79 percent of people in the country rathered to shop in-person before the coronavirus became part of the picture. At the time, only 21 percent fancied buying items online.
Showing a significant shift, 51 percent now prefer using online payments to card or cash payments and in-person transactions for future purchases.
Indeed, MasterCard’s survey about 5 months ago showed that 70 percent of Middle Eastern and African respondents affirm that they are now using some form of contactless payments, inadvertently shaking ATM use numbers.
The report found that 6 in every 10 respondents preferred contactless means of settling payments, while 81 percent indicated that the payment method would remain a habit post-COVID-19.
A separate MasterCard study showed that since the start of the health crisis in South Africa, 89 percent of respondents from the country have resorted to contactless payments for groceries. 60 percent use it for pharmaceutical transactions, 15 percent use it for food, and 8 percent for transport.
“Cash withdrawals from ATMs are now half what they were two years ago. Today, 89 percent of transactions are being conducted digitally with a 62 percent and 90 percent penetration for our retail and corporate clients, respectively,” said Edith Vjuma, the head of retail banking at Standard Chartered Bank Kenya.
Recall that in March, the Central Bank of Kenya removed charges on M-PESA transactions of up to KES 1 K and eliminated costs on bank-to-M-PESA cash transfers. The intention was to reduce cash use, curb the spread of the virus, and ultimately increase the uptake of digitally-enabled payments.
The drive towards digital payments and reducing cash reliance isn’t entirely new to African payments markets. Several mechanisms are already in place to enable it, while banks, card companies, fintechs, and retailers are involving in rolling out digital-first, non-physical payment mechanisms. It is only a matter of time before the reduction of ATM use comes in sharper focus.
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