In this episode of ITWeb TV, Johan Gellatly, MD of Altron FinTech, discusses the company’s several initiatives to boost financial inclusion in South African townships, as well as the challenges the kasi economy is facing in regards to digital payments adoption. #Altron #Fintech #FinancialInclusion
Altron FinTech is stepping up efforts to digitise payments within South Africa’s vast informal economy − a sector that still relies heavily on cash transactions.
So said Johan Gellatly, managing director of Altron FinTech, in an interview with ITWeb TV.
He noted that the fintech division of JSE-listed Altron Group is rolling out technologies and partnerships aimed at enabling small traders, township businesses and informal merchants to accept digital payments more easily.
The initiative forms part of a broader push to bring greater financial inclusion, improve transaction transparency and reduce the risks associated with handling cash.
South Africa’s informal economy – which includes street vendors, spaza shops and independent service providers – represents a significant portion of daily commercial activity but remains largely underserved by traditional banking and payment systems.
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By introducing accessible payment platforms and low-cost digital tools, Altron FinTech aims to bridge this gap and help small businesses participate more fully in the digital economy, Gellatly said.
He added that Altron FinTech is expanding its Kasi Sales Squad initiative from Soweto into Ekurhuleni and the Johannesburg CBD, as it seeks to widen the use of digital payment tools among township businesses.
The programme, piloted in Soweto, deploys locally-recruited youth to introduce small and informal traders to payment technologies, such as point-of-sale devices, recurring payment systems and digital disbursement tools.
Describing why the local informal economy still prefers cash transactions, he said some “trust issues” still exist about going digital.
“When I go to a store in the country and I’m using the cash method of paying for my goods or services, I part with my cash, I get my goods, and I walk out the front door and I’m satisfied. We’re in a win-win situation because the retailer is satisfied – they got their money instantaneously. The consumer is satisfied – they got what they bought and both parties part ways,” said Gellatly.
“The recourse of that transaction is that you go back to the retailer, and you say to them the item that you purchased isn’t working the way that you envisaged or what you purported it to do, and the transaction is then reversed. So, I get my cash back, I give the item back and we all part ways.”
Johan Gellatly, managing director of Altron FinTech. (Image by Lesley Moyo)
Gellatly pointed out that digital payments still carry delays that cash transactions do not, particularly for retailers waiting for settlement.
He explained that when a customer pays electronically by tapping a card at a payment terminal and leaves with the goods, the consumer effectively completes the transaction immediately.
However, the retailer does not receive the funds at the same time. Gellatly noted that under the structure of South Africa’s national payment system, merchants are typically only settled a day or two after the transaction takes place.
He added that a similar delay occurs when goods are returned. Even after the item has been taken back, the consumer may have to wait several days before the refund reflects in their account, he noted.
According to Gellatly, these delays highlight an inherent inertia in digital payment processes that is not present in cash transactions, where both the retailer and the customer settle the exchange instantly.
That is the physical experience. Now we look at the other layer that cash doesn’t attract any transaction fees.
“In the digital space, you’ve got this trust issue and you’ve got the fee issue. Now you have this construct in the informal economy that ‘the banks are eating my money’; that’s the feedback that we’re getting from our people. And what I mean by eating their money, it’s not the banks actually, it’s the whole national payment system because there are lots of actors that are involved in making that digital transaction round trip.
“We’ve got a few systemic issues in the whole IT side of it, which translates into the fees because somebody has to keep that infrastructure going to make that transaction digitally possible. There is this trust perception that we have to overcome. I am of the view that in 30 years since 1994, we’ve only introduced one transaction that is fee-friendly, which is PayShap.”
Gellatly believes a reduction in interest rates could significantly boost South Africa’s economy and lower unemployment.
He pointed out that policymakers underestimate the true scale and resilience of the country’s informal sector.
“Cutting interest rates by about two percentage points could dramatically change the country’s economic outlook within two years.”
He believes such a move could reduce unemployment by between 4% and 5% as economic activity accelerates.
He argued that current policy discussions are largely based on data from the formal economy, where transactions and employment are easier to track. By contrast, large parts of the informal economy – including street vendors, hairdressers, home-based day care operators, room rentals and small repair businesses − remain difficult to measure.
According to Gellatly, the lack of reliable data means the informal sector’s contribution to livelihoods and economic activity is often underestimated. He noted that everyday cash-based transactions, such as the sale of street food or small services, are rarely captured in official statistics despite supporting millions of households.
“The resilience of this sector is evident in the fact that many South Africans continue to meet basic needs even during difficult economic periods, suggesting that informal trade plays a crucial role in sustaining communities.”
He added that expanding access to financial products and services for informal businesses could unlock faster economic growth. In his view, if the sector were better supported and integrated into the broader economy, South Africa could outperform many other countries in terms of growth.
Previous interest rate cuts during the COVID-19 period demonstrated how quickly the economy can respond when consumers have more disposable income, he said.
He pointed out that consumer spending patterns indicate that South Africans generally use credit responsibly when they have the means to repay it, pointing to rising retail and credit activity as signs of confidence when economic conditions improve.
For Gellatly, the key constraint on growth is the need to “open up” the economy more aggressively. Without stronger measures to stimulate economic activity, he warned that national growth and employment targets outlined in government policy announcements risk remaining unattainable.
