Fintech service providers have a significant role to play in driving the financial inclusion national agenda. However, technology alone cannot address South Africa’s financial inclusion challenges – to create an enabling environment for financial sector innovation, stakeholders also require collaboration.
According to Johan Gellatly, MD of Altron FinTech, a leading fintech that is helping to reshape the sector to enable financial inclusion with affordable merchant and consumer cost friendly accessible financial transacting solutions.
Gellatly says financial inclusion is a key focus of the Altron strategy. “South Africa’s informal, largely cash-based, economy is estimated to be worth anything from R250 billion to R750 billion depending which research body data is used. It’s substantial,” he says. He notes that cash-based informal trading comes with substantial risks and costs to merchants and consumers alike.
“We are working to better serve the community with our payment solutions products and our services, to address the high inhibiting costs that are preventing the informal economy to embrace electronic payment transactions,” he says.
Inclusion with ASAPP
One important initiative that Altron FinTech is involved in, is a new association to be formally launched early next year. Gellatly says: “We are a co-founder of the new ASAPP association, which is an association put together by non-banks, predominantly fintech’s. The association is comprised of eight non-banking entities who have identified that collaboration is needed in order to leverage our collective creative and innovative payment solutions. In this way we can assist with crafting a South African financial inclusive payment system that supports the initiatives of the South African Reserve Bank who is working towards changing the national payment system to achieve financial inclusion.”
Inclusion for SMEs
As a predominantly B2B business, Altron FinTech serves a large SME market. Gellatly says key issues hampering moves away from cash include high transaction costs and a lack of trust in traditional banking.
“SME merchants using a point-of-sale terminal could incur substantial transaction fees as high as 3.5%. Withdrawing money at an ATM also carries a high transaction fee for the consumer. So, we need to look differently at how we go about setting fees that inhibit the informal cash-based economy making use of the existing platforms,” Gellatly says.
“Cash transactions are instant by nature; the trading parties are instantly satisfied with the outcome of the transaction. The new payment system must achieve the same result otherwise we would have failed. The SARB’s Payshap instant payment transaction is a step in the right direction. We have added this option to our payment type offering. Embracing Payshap as a transaction type that we offer to our customers have been a tremendous success, we have experienced a doubling of transaction processing volume since our launch The next phase is Payshap request to pay and we are trialling the instant transaction type with the banks at present that we believe will have a profound impact in the merchant consumer payment interaction.
Innovations with impact
Among Altron FinTech’s innovations goal of working towards financial inclusion are NuCash and NuCard. Gellatly explains: “We are on a journey to put the power back into the hands of the consumer with an alternative store value wallet. From this wallet, consumers will have options of transferring money between NuCash wallet holders, sending transactions to ATM’s to disburse money, or transferring money into their bank account for EFTs or e-commerce purchases.”
NuCash is already making an impact, he says: “It’s growing like a house on fire. We’ve done about 200,000 NuCash transactions since it launched in July 2024.”
Another innovation in support of microlenders, Gellatly says: “One of our customer segments we service is unsecured lending. Some years ago, we noted that these merchant disbursement transactions were all cash-based, exposing them and consumers to risk. So, we introduced a card product which works very much like a gift card. The lender would issue a card to the consumer, who could use it at any retail pay point, or go to any ATM to withdraw cash. This removed cash from most of our customers’ premises, reducing the risks of holding cash on hand and this radically changed how loans were disbursed to consumers.”
How Is JSE-Listed Altron’s Platforms Business Performing?
By Gugu Lourie
Altron, a JSE-listed technology group, has reported a 10% increase in revenue for its Platforms Business, reaching R1.9 billion for the six months ending on 31 August 2024.
The Platforms Business’s EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 37% to R776 million, while operating profit rose 47% to R415 million.
Altron’s Platforms Business comprises Netstar, Altron FinTech, and Altron HealthTech.
Valued at R7.6 billion on the JSE, Altron invested R359 million in capital expenditures during this period, dedicating R330 million to growth-focused initiatives. This investment includes R211 million allocated to Netstar’s capital rental devices and R65 million toward developing systems and platforms.
