There were 19 million underbanked individuals in the country, and over one million micro, small, and medium-sized enterprises still transacting exclusively in cash.
This information is contained in the latest Payfast report released recently. The report aims to offer a comprehensive look at South Africa’s new State of Pay. The report featured insight and statistics from Capitec, Mukuru, Yebo Fresh, and The Shopaholic.
Payfast chief commercial officer David Adams said: “Previously, financial inclusion was linked and limited to an organisation's physical reach, but with the innovations in technology and software, things are changing“.
He said some of the key findings of the report speak to the opportunities that were presented to businesses in South Africa, merchants specifically around the informal segment.
“The report found that businesses are diversifying in their payment methods to tap into the unbanked, but many merchants think it is a segment they are not serving, on the contrary, the segment is actually purchasing from the merchants, it's just that the product is not taken to the segment and that speaks to the opportunities. What we encourage is merchants to open up and serve that segment. They must not steer away from it,” he said.
The report found that proliferation of digitised cash offerings, digital wallets, and accessible transactions through smartphones, feature phones, or even WhatsApp, means there was no excuse to not plan with financial inclusion in mind.
Payfast managing director Brendon Williamson said: “One of the key takeaways of this year’s report is that making online transactions accessible to this informal segment was critical, not only for merchants who want to grow their business, but for the growth of the entire South African economy,” Williamson said.
On the township economy, Adams said the segment was valued at R260 billion, but more than 80% of merchants did not plan to introduce delivery into informal settlements at all in the near future.
“This tells us that a major part of the drive towards financial inclusion is education around the size of the opportunity it affords those involved. With the launch of this report, we hope to begin the important work of helping all industry players to think bigger and more inclusively,” Adams said.
The report said there was a significant growth in credit and buy now pay later payment methods.
“The average basket size for these types of online credit also increased by 93% this year, coming in at around R1 778. As the cost of living continued to rise in South Africa, this was said to be likely to grow as next year beckons,” it said.
The report found that as the country headed towards Black Friday and the festive season, 61% of merchants were feeling positive about the year ahead.
Meanwhile, in a report titled Unlocking the FinTech Potential in Africa, by Boston Consulting Group (BCG), in collaboration with Elevandi, highlight how to further advance financial inclusion on the continent and explore advancing the FinTech industry and unlocking its full potential in the years to come.
“The high unbanked and underbanked population, accelerating mobile and internet penetration, and an increasing need for financial inclusion across the region present a great opportunity for FinTech companies.
“If policymakers can foster the right environment for FinTechs to grow and financial inclusion to expand, it will ultimately foster long-term financial inclusion, efficiency, and quality of life, which will turn into taxes, economic growth, and capacity to reinvest,” the reports found.