Cash to card: the next frontier for SA's micro-SME sectorSouth Africa's informal economy, made up of thousands of small businesses in city centres and townships across the country, represents a massive opportunity for job creation and economic growth, and the move from cash to digital is an important move to unleash the potential of this sector. Photo by Ivan SamkovĀ© from Pexels For the migration from cash to card to gain meaningful momentum, it needs to be driven by consumers, and this is already happening. GG Alcock’s research for his book Kasinomics indicated that in townships each person has on average two debit cards,” says Khupe. Over the past year, Retail Capital has certainly noticed a consumer-led drive to digitisation in the informal sector. Merchants have little choice but to cater to the choices and needs of their customers. This has been accelerated by Covid-19, with people demanding contactless ways of paying for goods. Certainly, we are seeing a marked uptake of QR payments and card machines in townships, most notably in food and beverage and services sectors, including hairdressers, taverns and spaza shops.However, there is more to gain from digitising payments than convenience. As more digital payment vendors make inroads into informal economies, those businesses gain access to a host of digital services through their partners that would ordinarily have been out of reach. Most notably, is access to working capital and loans. If a merchant uses a partner payment portal, for instance, they can have access to almost instant and guaranteed funding, because they have built up a digital profile that would otherwise not even have been an option. There’s enough research and anecdotal evidence in SA and abroad that says access to capital is vital for small business owners not only to survive, but scale and take their businesses to another level. When I go into townships, one of my first stops is at an ATM to draw money, just in case. Those that spend most of their time in townships may not find it convenient to go elsewhere to shop, and so they are the ones pushing merchants to make the move. A stolen card machine has far less impact than a stolen cash register, for example, so crime is a consideration. Educating small business owners about the benefits for their businesses is crucial. The three most immediate benefits are:
Watch as the potential of these micro-enterprises is realised over the coming years, thanks in a large part to moving from cash to card. About the authorMandla Khupe is GM: Commercial at Retail Capital |