Southern Africa’s informal trading market has seen an exponential rise in digital transactions since
the lockdowns of the COVID-19 pandemic, with merchants embracing digital payments and
acceptance as a means of embracing efficiencies, serving their customers, and growing their
businesses.
This, in turn, has helped to drive financial inclusion and access to key products and services for
consumers in townships, peri-urban regions and rural areas. That’s according to Martin Wright, CEO
of Kazang, the prepaid value-added services (VAS) and card acquiring business within JSE-listed
fintech Lesaka Technologies.
Creating access for the excluded
He says that merchant-enablement is the key to improving access to financial services and digital
offerings within the informal market. Although this segment was traditionally seen as resistant to
making use of card and digital payments instruments, the picture has changed significantly over the
past few years.
Kazang, with its heritage in prepaid VAS for the informal market, is leading the charge in
digitalisation of South Africa’s informal sector. The company enables merchants to offer VAS such as
prepaid electricity, prepaid airtime, and data, DSTV subscriptions, bill payments and sports betting.
Merchants are supported with face-to-face onboarding and training for all VAS products.
With a footprint of more than 100,000 merchants, Kazang is perfectly positioned to help informal
traders embrace digital payment acceptance and supplier payments. Over the past four years,
Kazang has enabled 57,000 informal traders in South Africa to accept card payments and offer card
withdrawals at the point of sale with its Kazang Pay card acquiring solution.
Significant growth
Since the launch of Kazang Pay roughy 2.5 years ago, Kazang has seen a large transition from cash
transactions to card transactions. The majority of these transactions are from Debit Cards.
One of the key success factors is that it has become more affordable for merchants to accept card
payments, with low acceptance fees as well as free terminal hardware with no monthly rental for
those that meet a modest transaction threshold each month. Merchants receive training in how to
use the Kazang device to accept card payments.
Another secret of Kazang’s success lies in the merchant wallet linked to the card terminal. Card
transactions are instantly settled in the wallet, then merchants can use these funds immediately to
pay around 600 FMCG suppliers. This reduces the security risks associated with cash delivery and
merchants have working capital for purposes such as stock purchases.
“Our differentiator in the fintech arena is the breadth of our platform,” says Wright. “Not only do we
enable card acceptance and supplier payments solutions that streamline transactions, we enable our
merchants to offer a complete suite of VAS to their customers. We have effectively put 57,000 ATMs
in the market with Kazang Pay, allowing people to conveniently draw money from a nearby
merchant.
“Consumers don’t have to travel or draw money to buy the data they need to look for a job or
support their child’s online learning, pay for their DSTV subscription and electricity, or buy a lottery
ticket. From the merchant perspective, we can also support larger traders with financing and cash
vault services from our sister company, Connect Group.”
Rewards platform accelerates growth
Innovation and finding new ways to add value for merchants is an ongoing focus at Kazang. The
company recently launched a rewards platform on the Kazang device to reward merchants for
growing their business with Kazang and its partners.
The platform offers Kazang’s supplier and product partners access to the merchant base, offering
rewards and incentives based on merchant purchase and merchandising behaviour, surveys,
competitions and general promotions direct to the handheld device. To date, over a third of
Kazang’s merchants have signed up, and 30,000 offers have been claimed since the launch on 1
February this year.
In March, Lesaka closed the acquisition of Touchsides, a data analytics and merchant services
company it acquired from Heineken International. The acquisition significantly expands Kazang’s
footprint in the tavern industry in South Africa’s informal market. It also creates the potential to
drive revenues from data monetisation.
Says Wright: “Digitalising the informal economy is key to enhancing financial inclusion and growing
microbusinesses in southern Africa. We’re helping small merchants to serve their customers better
and provide easier access to essential services. Creating prosperity in this segment of the market by
solving merchants’ pain points is key to catalysing economic growth in South Africa.”