For years, African fintech has approached financial inclusion as a software problem. Build cheaper apps. Remove paperwork. Replace branches with smartphones.
But South Africa’s biggest retailers are advancing a different proposition entirely, financial inclusion is fundamentally a distribution problem.
That distinction matters because some of Africa’s most important banking infrastructure may not come from traditional banks or venture backed fintechs. It may come from clothing stores, supermarket tills and township retail networks that already handle millions of cash transactions every day.
That is the deeper significance behind Pepkor and Shoprite Holdings aggressively expanding into fintech and digital banking.
On the surface, these moves look like diversification plays. In reality, they reveal a structural shift in African finance, retailers are turning their physical footprint into financial infrastructure.
Africa’s financial inclusion paradox
South Africa has one of Africa’s most advanced banking systems, yet millions remain financially vulnerable.
According to the World Bank’s Global Findex Database, roughly 85% of South African adults have bank accounts. But account ownership does not necessarily translate into meaningful financial access. Millions still rely heavily on cash, informal savings groups, retail credit and alternative payment channels.
Across sub-Saharan Africa, the challenge is even larger. The World Bank estimates around 350 million adults in the region remain unbanked.
Fintech startups have spent years trying to close this gap digitally. But retailers may possess an advantage fintechs cannot easily replicate, physical presence !
Pep stores alone operate more than 2,600 locations across Southern Africa, while Shoprite’s supermarket network exceeds 3,600 stores. In many township and rural communities, a Pep or Shoprite outlet is more accessible than a bank branch or ATM.
That changes the economics of financial inclusion entirely.
Pepkor’s hidden banking infrastructure
Pepkor is already operating something that increasingly resembles a mass market financial network. The retailer processes around 22 million cash-in and cash-out transactions annually, alongside approximately 4 million bill payments through its stores. It has also confirmed plans to launch a digital bank by 2027, targeting 1.8 million primary banking customers within five years.
These figures matter because they reveal something often overlooked in fintech conversations, millions of consumers were already “banking” inside retail stores long before digital banks arrived.
Customers withdraw grant money, pay municipal bills, buy airtime, purchase prepaid electricity and access credit through retail environments every day. Retailers are not creating new financial behaviour, they are formalising and monetising existing behaviour.
That gives them a major strategic advantage over app-only fintech challengers.
Smartphones are becoming banking infrastructure
Pepkor’s smartphone rental business, FoneYam, may be the clearest example of this strategy in action.
The company added roughly 1.3 million smartphone rental accounts in just six months, pushing its active base to around 2.4 million customers.
On paper, FoneYam looks like a telecoms or consumer finance product. Strategically, it is far more significant.
Most digital banks depend on smartphone penetration to grow. Pepkor is effectively financing smartphone adoption itself.
That means the retailer increasingly controls the physical retail network, the consumer financing relationship and the device through which digital banking happens.
This is a different model from traditional African fintech.
Safaricom built M-Pesa through telecom infrastructure. China’s Alibaba Group transformed e-commerce data into financial services through Ant Group. South African retailers are now building a retail led version of embedded finance.
Retailers may understand consumers better than banks
he real competitive edge may not be branches or apps. It may be data.
Retailers often understand low-income consumers more intimately than banks do. They know what customers buy, how frequently they shop, seasonal spending patterns, repayment behaviour and income cycles.
That matters in economies where millions of people remain “thin-file” consumers with limited formal credit histories.
A customer who regularly buys groceries, school uniforms, prepaid electricity and airtime may appear risky to a traditional bank while simultaneously displaying highly predictable retail behaviour.
Retail transaction history becomes an alternative credit signal.
That is one reason fintech revenue is becoming increasingly important for retailers. Pepkor’s fintech related revenue reportedly grew 31.1% to R16.6 billion, significantly outpacing parts of its core retail business.
The implication is profound, retailers are no longer simply selling products. They are building financial ecosystems around everyday consumption.
The real battle is for the informal economy
The most important insight may be this, retailers are not only competing with banks. They are competing with informality itself.
Across Africa, informal commerce already functions as financial infrastructure. Spaza shops, informal merchants and community retailers often facilitate credit, payments and cash movement long before regulators classify these activities as “fintech”.
That is why Shoprite’s fintech expansion matters beyond supermarkets. Its acquisition of payments company R&A Cellular strengthens its reach into township and informal merchant payment ecosystems.
The opportunity is enormous.
The informal economy contributes an estimated 20% to 30% of GDP across many African economies, according to the International Monetary Fund. Yet much of that transaction activity remains outside formal financial visibility.
Retailers are attempting to bridge that gap by embedding financial services directly into existing commerce behaviour rather than forcing consumers into entirely new banking habits.
Why this model may scale across Africa
South Africa is becoming a testing ground for a broader African trend.
Nigeria’s informal retail networks, Kenya’s mobile-money ecosystem and Egypt’s merchant-heavy payments landscape all point toward the same reality, financial inclusion in Africa is increasingly being built through commerce infrastructure.
The companies best positioned to scale financial services may not be the ones with the best banking apps. They may be the ones already closest to where consumers live and transact daily.
That is the strategic insight behind Pepkor and Shoprite’s fintech push.
The future African bank may not look like a bank at all.
It may look like a discount retailer with thousands of stores, millions of weekly customer interactions and enough transaction data to quietly become one of the continent’s most powerful financial platforms.
