Nedbank COO says cash will stay until digital ID arrives
Nedbank’s former chief operating officer argued that South Africa’s heavy reliance on cash will only diminish once a national digital ID system is in place. He outlined the need for better public‑private coordination, the role of instant payment systems, and the emerging influence of AI‑driven tran…
By Felo News Desk · Published
At the Nedbank Payments Summit in Sandton, former chief operating officer Mfundo Nkuhlu warned that South Africa’s cash‑heavy economy will not shrink until a nationwide digital identity platform is operational. He cited the country’s unbanked population as the key obstacle to a cash‑free future and argued that a robust digital ID is the foundation for bringing those consumers into the formal payments system.
Cash, Identity and the Unbanked
Nkuhlu explained that the real barrier is not technology but coordination between the government and the private sector. “We often struggle to cross the gap between government and the private sector,” he said. He noted that the Department of Home Affairs aims to finish the hosting infrastructure for a national digital identity platform by 31 March 2027, with citizens expected to receive digital credentials via a secure mobile wallet during the 2027/2028 financial year.
Identity experts have flagged gaps in the draft rules, such as reliance on 2D selfies for liveness checks, which can be fooled by photographs or screen‑based images. A more secure depth‑sensing approach would strengthen the system’s integrity.
Gradual Decline, Not Immediate Abolition
While Nkuhlu acknowledged that cash may never disappear entirely, he urged a gradual decline similar to the paths taken by India and Brazil. “They have shown the intent and will to go digital for the majority of the population,” he said. Both countries achieved this through state‑backed instant payment systems—India’s Unified Payments Interface (UPI) and Brazil’s Pix—offering near‑free or free transactions to consumers.
South Africa’s central bank has explored a “cash utility” housed in PayInc, the payments infrastructure company formerly known as BankservAfrica, in which the Reserve Bank now holds a 50% stake. This initiative would provide a regulated framework for low‑value digital payments, including Nedbank’s own PayShap platform, as part of the Payments Ecosystem Modernisation programme.
The New Payments Paradigm
Nkuhlu described the current landscape as a shift toward instant, programmable, and increasingly intelligent payments. “Transactions are increasingly programmable, triggered automatically by events, and increasingly intelligent, gathering and analysing data as they go,” he said. He highlighted the growing role of stablecoins and tokenised deposits, noting that they will complement rather than replace traditional banking structures.
The rise of AI agents that can initiate payments autonomously was another point of emphasis. While this technology promises efficiency, it also introduces new risks, as agents may act without direct human oversight. “We have also seen agents going rogue,” Nkuhlu warned, underscoring the need for robust regulatory frameworks to manage these emerging threats.
Trust, Regulation and the Future
Trust emerged as the central theme in Nkuhlu’s discussion. He questioned who should authorize a payment, who bears the cost of an agent’s mistake, and how consumer privacy can be preserved while preventing financial crime. These questions, he said, will shape the integrity of South Africa’s future financial system.
As Nkuhlu prepares for early retirement at the end of December after more than 22 years at Nedbank, the bank is discontinuing the COO role and redistributing his responsibilities across its executive committee. The conversation he sparked, however, will likely influence policy decisions and industry strategies for years to come.
What Happens Next?
The rollout of the national digital ID platform remains a priority for the Department of Home Affairs, with a target completion date of March 2027. In parallel, the Reserve Bank’s initiatives—such as the cash utility concept and the Payments Ecosystem Modernisation programme—will continue to evolve. The success of these projects will hinge on effective public‑private collaboration and the ability to address the regulatory and technical challenges outlined by Nkuhlu.
For South Africa’s unbanked population, the arrival of a secure digital identity could open doors to digital wallets, instant payments, and a broader range of financial services, gradually reducing the country’s dependence on cash.
Key facts
- Digital ID is essential to reduce cash reliance
- Public‑private coordination is the main bottleneck
- India and Brazil offer successful models
- AI and stablecoins are emerging but need regulation
- Trust and privacy are critical for future payments
Why it matters
The shift toward digital identity and instant payments is pivotal for South Africa’s financial inclusion and economic modernization. Understanding these changes helps stakeholders navigate the evolving regulatory landscape and seize new opportunities.
Frequently asked questions
What is the target date for the national digital ID platform?
The Department of Home Affairs aims to complete the hosting infrastructure by 31 March 2027, with digital credentials issued in the 2027/2028 financial year.
How will the cash utility work?
It will be housed in PayInc, a payments infrastructure company with a 50% stake held by the Reserve Bank, providing a regulated framework for low‑value digital payments.
Will stablecoins replace traditional banks?
Nkuhlu believes they will complement banks, not replace them, by enabling fast global transfers through blockchain.
What risks do AI payment agents pose?
They can act autonomously, potentially leading to unauthorized transactions and increased regulatory challenges.
Sources
- [1] techcentral.co.za — originally reported as “Nedbank: the cash economy won't die until digital ID arrives”
