Genesis study finds 96% of transactions by SA’s 1.5m informal enterprises are made in cash

More than 51 percent of South Africa’s informal enterprises have encountered strong customer interest in paying by card, yet around 90 percent of them continue to run as cash-only businesses.

This is according to Insights into the Informal Economy Report, a Mastercard study released at the company’s Digital Indaba in Cape Town last week.

Despite rural and township residents using cards for 60 percent of their transactions at formal retailers, only four percent of transactions are card based at informal retailers. This is due to these small traders not offering card or mobile acceptance.

“Card acceptance is highly attractive for informal traders and is an important next step to increase revenue, but lack of access to formal banking tools and understanding of available payment options limits their opportunity for growth,” says Gabriël Swanepoel, VP of Product Development and Innovation at Mastercard South Africa.

Conducted by Genesis Analytics on behalf of Mastercard, the study looks at understanding trends in payment instrument usage – from cash to card – and estimates the opportunity for cash displacement in the informal sector.

Low Card Acceptance at Informal Enterprises Despite High Consumer Demand