FinTech powers new growth for South Africa’s grassroots retailers

By Vriti Gothi

South Africa’s small local shops are becoming an important area for FinTech growth, as new digital tools help small traders solve everyday challenges.

Research reveals that the informal sector remains a critical backbone of the South African economy, accounting for nearly a fifth of total employment. Small traders alone make up around half of informal businesses, playing a vital role in townships, rural communities and peri-urban areas by bringing essential services closer to households and keeping cash circulating within local economies.

However, these micro-businesses have long faced tough challenges, razor-thin margins, high exposure to cash crime, limited access to working capital, and historical exclusion from digital infrastructure and financial services that larger retailers take for granted.

This is where modern FinTech solutions are stepping in, bridging long-standing gaps and enabling grassroots retailers to unlock new revenue streams, improve resilience and drive community-level economic growth.

One of the most impactful FinTech trends reshaping South Africa’s informal trade is the rise of affordable value-added service (VAS) terminals. These simple yet powerful devices allow traders to expand their product mix beyond basic goods, vending prepaid services such as electricity, airtime, mobile data, lottery tickets, and gaming vouchers.

For many merchants, this creates a vital new source of commission-based income and an important buffer in an environment where traditional retail margins are notoriously slim.

FinTech innovation is also helping small traders drive foot traffic and repeat visits by bundling everyday financial services with core retail offerings. Local shops can now enable bill payments, cash withdrawals, and prepaid top-ups alongside groceries and household essentials, transforming them into convenient one-stop service points for entire communities.

Once consumers know they can pay their DStv subscription, recharge electricity, or draw cash at a trusted local vendor, they are more likely to return, boosting sales without the need for costly advertising or additional stock.

Another critical benefit is reducing merchants’ dependence on cash a major source of risk and hidden costs. More than half of the VAS terminals deployed by some FinTech players now accept card payments, with many supporting digital wallets and cash-out options.

By digitising payments and supplier transactions, small traders can limit their exposure to theft and cut fees related to cash deposits and withdrawals freeing up capital for reinvestment.

Perhaps most importantly, FinTech solutions are enabling informal retailers to build a digital footprint. Every digital transaction processed through a terminal contributes to a usable financial record, laying the foundation for access to microloans, insurance, and growth capital services that were previously out of reach for many informal entrepreneurs.

By shifting more transactions online, grassroots retailers gain pathways to formal credit and working capital, boosting their resilience and growth prospects in the long run.

For local consumers, FinTech-driven convenience also translates into real savings cutting transport costs and time spent travelling long distances for basic services. With money circulating closer to home, entire communities benefit through increased economic activity and job creation.

Ultimately, accessible digital tools are bringing the benefits of modern financial services to South Africa’s informal market. As FinTech adoption deepens, small traders are better equipped to diversify, digitise, and thrive reinforcing their vital role in powering inclusive economic growth across the country.