By Annelene Dippenaar
Two decades ago, a startup or small business had limited options when it came to processing transactions, with cash being the only option for many. Startups by their very nature also lacked credit histories, making it difficult to apply for finance, and leaving them vulnerable to unaffordable loans when seeking financial support to fund their business needs. Today, the picture is very different, with access to digital finance platforms, management tools, and mobile banking transforming how these businesses can operate.
According to the Centre for Strategic and International Studies (CSIS), digitalisation has enabled 700 million people in developing countries to gain access to formal financial services between 2011 and 2014, with 62% of adults having a bank or mobile phone account. Similarly, advancements in technology, regulatory changes and the rise of innovative financial services has helped erase many of the barriers that prevented small businesses and startups from accessing financial and business support, and lessened their reliance on transacting solely with cash.
Disrupt Africa further found that the fintech sector dominates the South African startup ecosystem, accounting for 30% of activity. Of these, the payments and remittances category unsurprisingly makes up most, given the opportunity arising from the challenges African consumers face in accessing traditional credit services.
This is clearly evident with several innovative mobile POS solutions having entered the market, offering solutions tailored to micro and small merchants, including the likes of Yoco, iKhokha, Shop2Shop, Adumo and Zapper to name a few. Furthermore, the African fintech market is projected to reach $65bn by 2030, a clear indication of the impact these platforms are having.
More than just payments
These thriving digital payment solutions provide small businesses and startups the ability to track their transactional history providing financial institutions better data to calculate affordable lending, while also providing innovative tools and business support services.
Shop2Shop is a good example of a fintech that makes payments in its ecosystem between end consumers and its suppliers simple and trackable and provides these businesses transactional records to produce to financial institutions to progress business needs. By offering opportunities to small business owners to empower and grow their business, the fintech company has made a significant impact, and gained massive popularity in the informal market as their products remain simple for shop owners to adopt with little persuasion.
Additionally, the latest digital payment solutions and mobile banking apps have an added advantage for startups – their price point – by being quite affordable in comparison to high-end POS systems.
As a result, small businesses are becoming less reliant on cash, while being empowered with access to tools and support to better manage and grow their businesses and make more sound financial decisions. This change is also being driven by South African Reserve Bank (SARB) publishing its digital payments roadmap, which sets out 17 actions to be taken to tackle identified obstacles to the increased adoption and usage of digital payments in the country.
iKhokha and Yoco are other examples of fintechs that focus on providing affordable payment solutions for small to medium-sized businesses, while also offering additional business management tools such as inventory tracking and robust sales insights.
With a diverse and expanding array of solutions catering to different needs and sectors, South African fintechs are not only innovating to meet the demands of a rapidly evolving market, but also contributing to significant economic progress in the country.
About Shop2Shop
The Shop2Shop platform provides accessible end-to-end technology solutions designed to empower entrepreneurs and their stakeholders by facilitating seamless payments. Our mission is to help businesses thrive in the digital economy by removing barriers to growth.
From payment devices that accept card payments to free and instant payments between stores and suppliers within the ecosystem. Shop2Shop provides a payment solution that gives customers immediate access to their financial transactions, fostering an inclusive economy connecting major brands and small, informal stores.