The Hidden Price of Handling Cash for South African SMMEs

Many small businesses assume cash is “free” because there’s no visible swipe fee. Stack up every rand spent counting, banking and, crucially, protecting that money from theft, and cash can quietly eat 7 % – 9 % of turnover, well above a typical digital-payment fee of 1 % – 3 %.

Where the rands leak out

Cost bucket	Why it matters	Typical hit on R100 000 takings	Sources
Bank-deposit fees	SA banks charge flat & per-R100 fees at ATMs/branches (e.g. R4.80 + ≈ R1.30 per R100; some guides list ≈ R1.20 at smart ATMs).	≈ R1 300 – R2 750 (1.3 % – 2.8 %)	(standardbank.co.za)
Counting & admin time	Daily cash-ups, recon & trips to the bank (1 hr @ R150).	≈ R3 300 (3.3 %)	illustrative time-cost calculation
Shrinkage / internal & external theft	Studies put shrinkage at ≈ 2.6 % of sales for SA retail SMMEs.	≈ R2 600	(sajems.org)
Armed-robbery risk	Business-robbery stats topped 15 000 cases in just one quarter of 2024; insurers price this into premiums & excesses. A 0.5 % risk allowance is conservative.	≈ R500 (0.5 %)	(excellerateservices.co.za)
Lost sales (cash-only)	29 % of cash-only SMEs admit losing sales when clients have no cash on hand. Even a 5 % revenue boost wipes out most cash costs.	Hard to monetise, but real

Rule of thumb: For every R100 you bank in notes, you can burn R7–R9 making that cash safe and usable.

A quick case study

Potchefstroom home-improvement outletMonthly cash takings: R100 000Digital takings (EFT/QR/card): R80 000

Cash cost layer	Rand	% of cash takings
Deposit & bank fees	R1 900	1.9 %
Staff time	R3 300	3.3 %
Shrinkage/theft	R2 600	2.6 %
Armed-robbery risk premium	R700	0.7 %
Total hidden cash cost	≈ R8 500	8.5 %

Even if digital rails cost 2 % of turnover, this merchant saves roughly R6 500 a month by nudging customers toward tap-to-pay, QR or real-time EFT instead of notes.

Practical ways to tame the cash drag

• Track it for 30 days. Log every kilometre, minute and slip connected to cash; the numbers speak for themselves.

• Quote dual prices upfront. “R500 (digital) / R485 (EFT before delivery)” keeps you transparent under the Consumer Protection Act while steering clients to cheaper rails.

• Bank smart, not often. Use intelligent-deposit ATMs or night safes that credit instantly at the lower per-R100 rate; cut branch deposits to emergencies.

• Digitise reconciliation. Payment-provider dashboards export CSVs, slashing human error and saving VAT-return time.

• Insure what matters, not the float. Lower on-site cash means lower robbery exposure—and often lower premiums.

Bottom line

Cash feels free, but once you price in banking charges, counting time, shrinkage, armed-robbery risk and the sales you never made, it’s often the most expensive tender in the shop. Run the sums for your own business; chances are that encouraging customers to tap, scan or transfer in real time will leave more profit in your pocket than a bulging till ever will.