South African consumers are feeling the impact of the rising costs of living with a notable shift in their financial behaviour.
This is according to the findings of the SpendTrend25 report released by Discovery Bank and Visa which provides insight on South African consumer spending habits based on an in-depth analysis of credit card spend data.
Visa and Discovery Bank, said this year they also commissioned an independent public survey among a set of South Africans to capture more detailed perspectives on the use of cash and digital payments, use of subscription services, banking security perceptions and the influence of AI on financial behaviour.
Some of the key findings in the report are that card spend has slowed despite inflation being lower and groceries, retail, travel, eating out, and fuel account for over 70% of total consumer spending.
Discovery Bank CEO, Hylton Kallner, said: “Our latest comprehensive report identifies shifts in financial behaviour for practical insights into how much people spent, what they spent on, and how they spent it. We’ve seen a material shift to digital payments in our spend data, this is backed up by consumer preferences whereby over 80% of South Africans surveyed are choosing cards or digital payments over cash whenever they can, and the same percentage engage more with their credit card rewards and benefits than they did a year ago as they focus on value-based spending.
“And while digital banking has increased client financial safety, three out of five South Africans are more worried about their banking security than a year ago.”
Lineshree Moodley, Country Head for Visa South Africa, said South African consumers are feeling the impact of rising living costs, which is driving a significant change in spending habits.
"Our research, in collaboration with Discovery Bank, shows that people across all income levels are making spending decisions with careful planning and strategic use of financial tools.”
Some of the key findings of SpendTrend25:
- Consumer card spend has slowed, despite lower inflation. The prime rate cut in September 2024 offered some relief, but recovery has been slow and led many to rely on value-based spending. In 2024, average spend growth was flat even as inflation fell from 6% to 4.4%. Cities like Bloemfontein, East London and Gqeberha had faster growth in spending, while cities like Johannesburg, Cape Town, Durban and Pretoria experienced more muted growth in spend.
- Consumers are using their long-term savings for short-term expenses. South Africans are however looking for alternatives to relieve their financial pressures beyond short-term credit. One way is through the two-pot retirement system. Research amongst Discovery Corporate and Employee fund members found that they are using their retirement savings for expenses such as home or car costs, paying-off short-term debt, school fees and daily expenses.
- Groceries, retail, travel, eating out, and fuel account for over 70% of total consumer spending. Groceries take the top spot for most, while high-net-worth individuals dedicate a larger share of their spend to retail and travel. Johannesburg residents spend a lower share on groceries and more on shopping and eating out or takeout compared to those in Durban and Cape Town. In comparison, people in Bloemfontein, East London and Gqeberha spend a greater share on food and fuel but less on travel, eating out and takeout. As more people return to the office, fuel spending has surged.
- Busy lifestyles and the need for convenience increasingly influence consumer spending. Spending on eating out and takeout grew by 12% in 2024, outpacing growth in grocery spend (8%), with demand for convenience shaping consumer habits. Online grocery shopping in South Africa is still on the rise, with spend up 15%, while in-store grocery spend has grown by just 6%.
- The usage of cash is declining and being replaced by real-time, digital payments. The consumer survey showed that 67% of South Africans use cash only a few times a month or never at all, with over 84% choosing cards or digital payments whenever they can.