How fintech is transforming informal trade in South Africa

The informal economy is a vital engine of employment and entrepreneurship in South Africa. According to Stats SA, it accounts for nearly 20% of total employment, with spaza shops and tuckshops making up around half of all informal businesses. These micro-retailers are deeply embedded in township, rural and peri-urban communities – bringing essential goods and services closer to home.

But despite their importance, these businesses have long operated on the margins of the digital economy, facing challenges such as limited access to capital, high exposure to cash-related crime and razor-thin margins.

Fintech is changing that.

Digital tools transforming township trade

Fintech companies, like Lesaka Technologies, are equipping micro-merchants with affordable, easy-to-use digital tools that are reshaping how informal businesses operate. These innovations are not just about convenience – they unlock new revenue streams, improve financial inclusion and drive local economic growth.

• Unlocking New Revenue Streams: Lesaka’s POS terminals open up a wide range of value-added services. Merchants can sell prepaid electricity, airtime, data, lottery tickets and gaming vouchers, earning commissions on each transaction. This diversification boosts profitability without increasing overhead and administration while providing customers more reasons to visit merchants’ stores.

• Driving customer footfall and loyalty: Offering digital services such as bill payments and cash withdrawals turns informal shops into local service hubs. This increases footfall and encourages repeat visits, giving traders more opportunities to upsell and grow their customer base.

• Reducing cash dependency: Two-thirds of Lesaka’s 90 000 informal market POS devices now accept card payments, with many also enabling cash-out functionality. Merchants can also use a digital wallet linked to the terminal to pay suppliers from wallet funds. This reduces the risks and costs associated with handling cash while improving operational efficiency.

• Building a digital financial footprint: Regular use of digital terminals helps merchants build a transaction history, paving the way for access to microloans, insurance and other financial services that were previously out of reach.

• Strengthening local economies: By digitising informal trade, fintech is helping to keep money circulating within communities. Consumers save time and transport costs, while merchants gain tools to grow sustainably.

Fintech as a catalyst for inclusive growth

The rise of fintech in South Africa’s informal sector is more than a tech trend – it’s a socioeconomic shift. By bridging the digital divide, companies like Lesaka Technologies are empowering informal market entrepreneurs and laying the foundation for a more inclusive financial ecosystem.

As mobile connectivity and digital literacy continue to grow, the potential for fintech to uplift underserved communities is only just beginning to be realised.