MTN has waded into waters dominated by banks and payments providers, and is now offering informal merchants in SA the ability to accept digital payments.
Despite Covid-19 having done much to reduce the use of cash — as it was seen as a possible vector for the disease — a truly cashless world is still a long way away for SA.
This week, MTN said it has launched MoMo Pay, a digital payment service for informal merchants, enabling them to accept payments instantly via a QR code, merchant ID, or payment request, with a transaction fee of 0.5%.
In addition, merchants can sell value-added services such as airtime, data, prepaid electricity, DStv, Lotto, bus tickets, and more, earning a commission on every transaction.
According to data from Mastercard, the annual value of card transactions in SA is about $125bn (about R2.2-trillion), growing at a compound annual rate of more than 9% in 2024-28.
While 96% of transactions among SA’s 1.5-million informal enterprises are still conducted in cash, there is a concerted effort to shift towards digital payments.
MTN will compete with a number of banking and fintech operators such as Yoco, PayFast by Network, Lesaka’s Kazang and iKhokha that have been enabling digital payments, albeit through point of sale (POS) devices. Given its focus on small business, MTN’s unit has chosen to rather focus on the informal market, while eliminating the need for separate POS devices.
Typically, merchants or small business owners looking to accept card and other digital payments have had to buy POS devices, commonly referred to as “card machines”, at a set price or in some cases paying rental and transaction fees.
SA’s second-largest mobile operator said “adoption is ramping up rapidly”, with thousands of merchants having already been onboarded.
“With no registration fee, fast set-up, and a mobile-first user experience, MoMo Pay is already gaining traction in townships, rural areas and high-footfall urban markets,” the company said, explaining that it has an on-the-ground team working to acquire, train and sign on merchants.
“SA’s informal economy is rich with entrepreneurial potential, but until now it’s been locked out of the digital finance revolution,” said Kagiso Mothibi, CEO at fintech MTN SA.
“With MoMo Pay, we’re not just digitising payments, we’re unlocking a pathway to financial dignity and scalable opportunity for every vendor, spaza shop and street trader.
“Our vision is simple: we want every informal trader in this country to have a shot at digital prosperity. MoMo Pay is our first major move to make that happen — because real inclusion starts at street level,” Mothibi said.
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