Page 59 - Invited Paper Session (IPS) - Volume 2

IPS179 Wian B.
Figure 1: Major EFT Transaction Types, July 2017 – October 2018

4. Methodological Framework
The scope of the South African EFT salary index will be all monthly
interbank EFT transactions that are classified as salary payments, net of all
deductions made by the employer prior to effecting the payment, which are
paid on the 15th, 25th or at the end of each month. The remaining salary
payments (approximately 25 per cent of all salary transfers per month in value
terms), including those classified as daily and weekly wage payments, will
therefore not be considered for this index.
A price index, which will form the foundation of the methodological
framework, can be described as “…a weighted average of the proportionate
changes in the prices of a specified set of goods and services between two
periods of time, say a reference period 0 and current period .” (SNA 2008).
The focus will therefore be on fixed basket and chain-linked price indices. For
purposes of calculating fixed weighted indices, the basket of EFT initiators in
each period should be the same as in the base or reference period:
∈ 0 ∩ , 0 < ≤ 15
where is the matched basket of salary EFT transaction initiators and the base
period was chosen to be July 2017. Chain-linking allows for the inclusion and
exclusion of new and old items respectively:
∈ ∩ +1, 0 < ≤ 14
The EFT database consists of multiple daily transactions per EFT initiator per
day. To obtain a price measure per EFT initiator per month, average transfer
values per EFT initiator per transaction firstly need to be calculated as
= . The variable represents the average price (or transfer value) for

transaction , effected by EFT initiator , while and are the corresponding

total value per transaction and the number of transfers per transaction. To
obtain a daily average transfer value per EFT initiator, the harmonic mean of
−1 −1
=1

can be calculated as = ( ∑ ( ) ) . The variable represents the

average transaction value per EFT initiator per day based on transactions.
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