The South African informal economy is surrounded by estimates. The economy itself is estimated to be worth around R900 billion, with spaza shops sitting at the heart of this thriving retail sector.
The estimated 150 000 spaza shops operating around the country are contributing another estimate of 5.2% to the country’s gross domestic product, employing around 2.6 million people.
Informal traders, taverns, mobile vendors and the broader kasi community are conservatively valued at more than R600 billion annually. It is a thriving, bustling engine of enterprise that has primarily run on cash because infrastructure and access have traditionally been limited.
The financial infrastructure that makes card payments possible – acquiring banks, switching systems, certified payment hardware and compliance frameworks – was designed and priced for formal retailers and enterprises of a certain size, often serving customers who already have bank accounts.
Many smaller businesses, particularly those catering to unbanked consumers who rely on cash, have traditionally been excluded both by cost and by the realities of their customer base.
These payment systems have left their own trail of success stories and are living proof of the demand growing in the informal sector.
However, this narrative is changing as card payment growth outpaces every other payment method in South Africa’s informal economy.
A proliferation of fintech companies, such as Yoko, iKhokha, Shop2Shop and Flash, among others, have spent the last decade building payment infrastructures that are light and affordable enough to reach merchants that were not on the traditional roadmap.
These payment systems have left their own trail of success stories and are living proof of the demand growing in the informal sector. Nedbank acquired 100% of iKhokha for around R1.65 billion in August 2025 at a time when the platform was already processing more than R20 billion in digital payments annually. Flash reached an estimated R60 billion in 2025 with tapped value at about R21 billion.
These numbers represent a wholesale step to the left for South Africa’s informal economy transactions. And the speed of this change is accelerating. In 2025, Africa’s digital payments network expanded by 45% with card-based transactions in South Africa alone expected to exceed R2.9 trillion.
That said, these headline figures do obscure one important fact – most of the companies putting payment devices into the hands of informal traders are not doing so alone. Infrastructure is essential. The infrastructure is needed to process a card transaction legally and reliably across bank integrations, switching, payment facilitator licensing, third-party payment provider registrations with PASA through sponsoring banks. All these steps and processes are expensive to build, certify and maintain.
Regulatory capital requirements and ongoing compliance obligations, plus the technical burden of maintaining live connections into acquiring banks, are costs that make sense at enterprise scale. For a fintech firm with an entire value proposition centred around reaching micro-merchants with affordable payment tools, carrying that infrastructure in-house is both inefficient and unnecessary.
What’s needed is what wholesale provides in a mature market, which is a back-end supplier that has already built the infrastructure at scale and lets others sell through it. It is a structural adaptation that gets less attention than the front-end story of digitising spaza shops, but it is the entire framework on which these innovations hang.
The companies racing to put card machines in the hands of informal traders are, in large part, doing so by routing their transactions through payment technology providers that already hold the bank relationships, run the switches and carry the compliance overheads. The payment facilitator has become the retailer.
And this architecture matters because it determines who can participate in this market and how quickly. Building a direct integration into South African acquiring banks is a multi-year, multimillion-rand undertaking, but accessing those same rails through a wholesale arrangement takes a fraction of the time and cost. The informal sector has grown at this remarkable pace not because the infrastructure got cheaper, but because it got shareable.
This doesn’t diminish the capabilities of the front-end innovators. The companies knocking on doors in Soweto and Khayelitsha and Mitchells Plain, selling payment devices to traders who have never accepted a card before are setting down the stones that will form the payment roads of the future.
But behind every card machine processing a transaction in the informal economy, there is a payment technology stack connecting that device to a bank. And these stacks are also built by innovators that wanted to find new pathways to economic success within the thriving informal economy.
These two lines, running parallel from the front- and the back-end are the real South African informal payment story. The infrastructure from each is changing the market and the way this sector transacts. And combined, they are bringing access to an economy that has incredible potential to change and drive the economy and employment.
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