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South African retail major Pepkor has launched its most daring vote of confidence in the informal economy to date with the planned listing of its fintech business within the next three years.The mooted listing comes after the JSE-listed retailer, valued at about R80bn, on Wednesday deepened its fintech ambitions by investing R1.57bn to acquire a controlling 57.1% stake in Shop2Shop.It would combine Shop2Shop with Pepkor’s Flash payments and value-added services platform to create a R21.3bn fintech business that processes more than R200bn in transactions annually. (Dorothy Kgosi) Pepkor said the combined business, which it refers to as FintechCo, will become the vehicle for a future listing as the retailer seeks to unlock the value of one of its fastest-growing businesses while expanding its footprint in South Africa’s informal market.The retailer said that its planned bank, with code name PlusB, will not form part of the listed fintech business. The bank will remain a separate legal entity because of regulatory requirements, though it is expected to work closely with FintechCo by allowing customers to move more easily between formal banking services and the merchant network served by Flash and Shop2Shop.The transaction comes as competition for South Africa’s informal and small business market intensifies, with banks and fintech companies investing heavily in digital payments, merchant acquisition and lending.NedbankLast year, Nedbank completed its R1.65bn acquisition of merchant payments business iKhokha, strengthening its position in the small business market. Lesaka, which completed its acquisition of Adumo in 2024, now processes more than R250bn in annual payment volumes across its merchant and consumer businesses. Meanwhile, Capitec has been expanding lending to small businesses, including credit based on card payment turnover, while also launching banking products aimed at informal businesses.Read: Pepkor CEO in the pound seats as group plans to list fintech businessPepkor’s move is taking place against the backdrop of a rapidly growing township economy. Standard Bank estimates South Africa’s township economy generates more than R900bn in economic activity each year, while the informal economy accounts for almost one-fifth of total employment. Though banking penetration is relatively high, many business owners continue to rely on personal bank accounts, cash transactions and manual bookkeeping, creating opportunities for businesses offering integrated payments, lending and merchant services.Pepkor believes combining Flash and Shop2Shop positions it to capture more of that opportunity.Flash has become the group’s largest fintech business since being acquired in 2021, accounting for roughly two-thirds of fintech revenue. The platform enables merchants to sell airtime, prepaid electricity, data and vouchers, as well as to effect bill payments and money transfers. Shop2Shop specialises in merchant payments, cash management, supplier payments and trade enablement.Shop2Shop The businesses have limited overlap, with only about 20%-30% of traders using both platforms. Bringing them together will allow merchants to access a broader range of services through a single platform, including ordering stock, paying suppliers, accepting card payments, digitising cash transactions and accessing working capital. According to Pepkor, the combined business serves about 177,000 merchants through more than 114,000 payment devices and almost 3,000 cash-counting safes. Management said about three-quarters of the R172bn flowing through the Shop2Shop ecosystem is paid back to suppliers, reflecting the role the platform plays in supporting working capital for small businesses.The transaction also builds on Pepkor’s broader financial services expansion. Flash processed R34.7bn in transaction value during the six months to end-March, up 20.3% from a year earlier. Over the same period, its network of active traders grew to 176,000.Capfin’s unsecured lending book increased to R5.3bn, while FoneYam expanded its active smartphone rental customer base to 2.4-million. Abacus Insurance doubled its revenue as insurance products were rolled out across more of the group’s retail brands.Pepkor recently received regulatory approval to establish a bank, with its first products expected to launch later this year. The group has previously said it serves about 26-million customers, more than 12-million of whom are active on its digital platforms.Financially, both businesses entering the transaction have recorded strong growth. Flash generated revenue of R11.15bn and earnings before interest, taxes, depreciation and amortisation (ebitda) of R900m in the year to September 2025, while Shop2Shop reported revenue of R9.33bn and ebitda of R661m in the year to June 2025. Shop2Shop’s ebitda has grown at a compound annual rate of 85% over the past three years.The transaction remains subject to competition and other regulatory approvals, with Pepkor expecting implementation in roughly nine months.
