Africa-Press – South-Africa. Capitec is hoping to attract the entrepreneurs and small businesses operating in South Africa’s informal economy, which has an estimated value of R1 trillion.
According to Capitec CEO Graham Lee, targeting this market is not as complicated as many may think, as informal businesses often share many of the same needs as those in the formal market.
In addition, Capitec can tap into its virtually unmatched database, derived from its nearly 26 million customers, to develop products specifically geared towards informal businesses.
Since the launch of Capitec’s Business Banking offering, it has made its intentions to tap into the informal – or, as the bank calls it, “emerging” – market clear.
However, this is easier said than done, as it is still difficult to estimate how many businesses operate in this sector.
This is not to say that no one has tried. Informal-economy expert and author GG Alcock has worked in and with this market for years and estimates it is worth between R750 billion and R1 trillion.
Standard Bank’s Business and Commercial Banking unit also released its first Township Informal Economy Report late last year, wherein it valued the market at around R900 billion.
The report revealed that the informal market consists largely of small-scale, unregistered, and unincorporated businesses.
Standard Bank’s data showed that the vast majority of businesses in the informal economy fall below the value-added tax turnover threshold of R1 million, with 85% of traders reporting annual turnover below this threshold.
However, a quarter of these businesses reported annual turnover of between R500,000 and R750,000, indicating that the informal economy remains highly lucrative.
The unregulated nature of these businesses makes it incredibly difficult to know just how many there are, what their turnover is, and, crucially for formal companies looking to enter the market, what their needs are.
The graph below, courtesy of Standard Bank’s report, shows how businesses in the informal economy are funded, followed by their accounting preferences.
Capitec’s plan of attack
In an interview following Capitec’s 2026 annual results presentation, Lee told Daily Investor that while the bank has experienced some challenges in its attempt to penetrate the emerging market, they were not unexpected.
“If you look at sort of any segments in the market, you can sort of characterise them or at least use the same basic mental model in terms of understanding what their needs are,” he explained.
“What you see in the emerging market is very much the same needs as you expect of any business.”
Lee said the two most pressing needs for most businesses are the ability to transact and access to funding.
“We can see that at every tier in terms of business size and turnover, and you definitely see it also in the emerging market,” he said.
By starting with the first need, enabling businesses to transact quickly, easily, and efficiently, Capitec can then use what it learned to tailor credit products for the specific needs of these businesses.
Lee explained that Capitec started by making it as easy and accessible as possible for businesses to receive payments.
In 2025, Capitec unveiled its new point-of-sale device, which the bank claimed had the lowest, most transparent commission rates of any device on the market at the time.
The bank also introduced a flat cost to buy the machine itself, as opposed to using the renting model other companies employ.
This not only allows informal businesses to receive payments more easily, but also incentivises them to move towards digital banking, given that cash remains highly prevalent in the emerging market.
This, in turn, gives Capitec access to more data regarding these businesses and their needs, allowing the bank to tailor its business banking products more effectively, especially with regard to funding.
For emerging market businesses specifically, Lee said Capitec has learned that they often earn small amounts regularly.
Therefore, the bank could redesign its credit product to one that suits this income flow better, by giving small amounts daily as opposed to large amounts monthly.
Capitec calls this its “Pay-As-You-Trade” product, with which loan repayments are made by deducting a pre-agreed percentage of inflows daily.
The graph below shows the growth in merchants’ use of Capitec’s smart card machines.
Targeting entrepreneurs
The Pay-As-You-Trade product, launched in December 2025, forms part of Capitec’s Entrepreneur Account.
Lee described this account as a “bridge” between Capitec’s personal and business bank, targeting sole proprietors and people with a side hustle.
With zero monthly fees and low costs, Capitec said its Entrepreneur Account enables clearer separation between personal and business finances, improves financial visibility and supports multiple income streams through up to four dedicated accounts.
“Access to credit is assessed against observable business cash flow behaviour rather than traditional documentation alone, improving financial inclusion,” the bank said in its FY2026 Annual Report.
According to Lee, this product has been highly successful so far, with Capitec’s total lending book up 30% to R30.4 billion in FY2026.
Of this R30.4 billion book, scored lending was up 118% and accounted for R3.1 billion.
“We really do see that access to funding is going to be significant in giving them both the capital, small capital, potentially, to allow those businesses to grow much more effectively,” Lee told Daily Investor.
He used examples of customers using this funding to acquire an oven for their bakery or to buy stock.
“We’ve got many examples of businesses tripling and, in some cases, even growing by more than five times the turnover in the months following the ability to both accept payment better and also receive funding,” he said.
The graph below shows how the Pay-As-You-Trade has helped to grow Capitec’s scored lending book since its launch in December 2025.
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