South Africa’s tavern sector, worth an estimated R40 billion to R60 billion a year and comprising more than 34,000 licensed tavern owners, plays a central role in township economies and community life. But technology adoption has lagged in this sector, with most taverns still operating on cash transactions and basic recordkeeping.
Fintech solutions are helping to change that picture, says Jonathan Thomson, Executive Head: Commercial at Kazang, the prepaid value-added services (VAS) and card acquiring business within JSE-listed fintech Lesaka Technologies. Modern fintech platforms are making it affordable for taverns to modernise their operations and increase efficiencies.
“Taverns play a central role in township life, offering social hubs to the community and creating hundreds of thousands of jobs,” says Thomson. “Yet most of these businesses remain cash-driven and reliant on informal processes and systems. Modern technologies offer tavern owners opportunities to increase their profitability.”
Fintech companies are helping to accelerate digital transformation by equipping tavern owners with affordable point-of-sale (POS) devices, he adds. These POS devices do more than allow tavern owners to ring up sales and keep track of transactions – they also enable inventory management, card acceptance, digital supplier payments and access to capital.
Says Thomson: “Tavern owners operate in a challenging sector, facing challenges such as low margins, exposure to cash crime and poor access to business financing. Digitalisation at the point of sale enables them to get better visibility into their transactions, streamline inventory management and offer customers more ways to pay.”
Kazang has equipped more than 10,000 licensed taverns with affordable or subsidised point-of-sale (POS) devices. Each device comes with a scanner, cash drawer as well as a terminal that enables that tavern for card acceptance and sale of prepaid services like airtime and bill payments.
Card acceptance is fully integrated with the POS system. Customers tap their cards and the sale is processed in a matter of seconds. This enables taverns to reduce the amount of cash they process, in turn, cutting the risks of cash crime and the costs of handling and depositing cash.
Funds from card sales are settled directly into a digital wallet, which tavern owners can use to pay a range of FMCG suppliers for stock. This streamlines supply chains, ensures faster replenishment of products and reduces the need for taverns to keep cash on hand to pay for deliveries, says Thomson.
The POS systems also feature integrated inventory management. The devices track stock sales and replenishment in real time, allowing tavern owners to track sales, optimise prices and manage breakages. This helps taverns to avoid losses, prevent shortages and make informed purchasing decisions.
Thomson says: “One of the biggest advantages of such a system is that it provides an electronic record of transactions, putting tavern owners on a pathway to formalising their businesses. They can, for example, start to tap into financing for working capital and business expansion.”
Kazang, for example, offers Kazang Capital, a funding solution for informal merchants developed in partnership with TymeBank. Tavern owners can qualify for pre-approved advances to expand, restock, or upgrade their businesses based on the digital records captured in their POS devices.
“Many merchants would like to add a pool table to their offering, stock up when suppliers are offering deeper discounts, or invest in additional refrigeration, but don’t have the funds,” says Thomson. “But more accessible capital can enable them to improve their customer offer and grow their business.”
He adds: “By combining tools for payments, supplier management, inventory tracking and access to working capital into one solution, we are helping to build a full fintech ecosystem for taverns. Digitalisation of this sector not only helps tavern owners grow their businesses, but also improves financial inclusion and strengthens the wider township economy.”
