South Africans are increasingly using crypto to pay for goods and services, according to a new report by Luno, South Africa’s crypto investment app, and a licensed FSP.
Christo de Wit, Luno’s country manager for South Africa, says, “One of the fundamental principles of money is its redeemability. Cryptocurrency is increasingly being treated as more than just an investment.”
The new Luno report, Bridging digital and fiat - crypto’s role in modern payments, highlights the growth of crypto payments, with retail giant Pick n Pay for instance recording over R1 million in monthly sales paid in crypto from just R25,000 a year ago.
Luno has processed more than R3 million worth of crypto payments through the Luno Pay feature since its launch in September 2023. The average basket size for purchases on Luno Pay is R370 and the largest basket to date was R10,000 (a Luno-imposed limit). The most popular cryptocurrency used in payments is Bitcoin, also the most popular crypto investment on Luno.
In a recent Luno social media poll, almost 40% of respondents said they used crypto to make payments. This provides an indication of how crypto is being used by those potentially more familiar with crypto than the broader public.
The poll also indicated a strong correlation between user familiarity with crypto and their willingness to use the payments feature in the Luno app. “More than 60% of payments through Luno come from customers who have been with Luno for three years or more,” says de Wit.
Carel van Wyk, founder and CEO of MoneyBadger, a company that connects merchants like Pick n Pay to crypto to enable payments in Bitcoin and others, notes in the report, “Use cases for crypto payments are growing but they’re still on the fringes of the traditional financial system. The investment case and the payment case will eventually align. If people have crypto, there’s a good chance they may want to spend it without having to exit the crypto ecosystem by selling their crypto and sending the money to a bank account.”
Overcoming crypto payment hurdles
The Bitcoin blockchain is currently too slow and costly to be viable as a global payments solution on its own, with the layer-1 blockchain able to process roughly seven transactions per second compared to Visa’s 24,000 and Mastercard’s 5,000. To address these latency issues, developers created the Lightning Network in 2018, a layer-2 network built on top of the Bitcoin blockchain. Lightning transactions surged by an estimated 1,200% since 2021, underscoring the expanding adoption and scalability of the Lightning Network.
In addition, MoneyBadger has developed a payments channel between vendors and a licensed exchange such as Luno, allowing payments to be cleared almost instantly.
Van Wyk doesn’t see crypto payments apps competing with other traditional bank-integrated payment channels; rather they help people use crypto the same way they would other forms of money. “What we offer is similar to what SnapScan or Apple Pay are already doing, but it’s on a different foundation. We want to make it convenient and simple for people to use their crypto and to create a market of merchants that accept crypto,” he explains.
Statista estimates that the global crypto payment market will triple by 2030 to $4.8 billion, from $1.6 billion in 2023. “As crypto adoption continues to grow, so could the case for being able to use crypto to pay,” concludes de Wit.
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