Pepkor looks to grow its fintech business through R21.3 billion Flash and Shop2Shop deal

Pepkor is looking to bring two parts of South Africa’s merchant payments market under one roof, combining its Flash business with Shop2Shop in a deal that values the proposed company at R21.3 billion. The retail group plans to take a 57.1% stake in the combined business, provisionally called FintechCo. Its contribution includes R1.57 billion for new Shop2Shop shares and the transfer of Flash, which has been valued at R10.6 billion.

The transaction gives Pepkor a bigger role in the services used by small retailers and informal traders. Flash has a network of merchants selling products such as airtime, electricity and digital vouchers. Shop2Shop provides payment services for businesses, including transactions between merchants and suppliers. Putting the two together would give Pepkor a larger fintech operation. What it means for the merchants using these services is less clear.

A bigger business serving everyday trade

Flash and Shop2Shop operate in areas that often overlap in the daily running of a small shop. One helps merchants sell digital products, while the other handles business payments and related transactions. For a spaza shop owner, these are practical services. Customers may come in to buy groceries and airtime, while the owner has to settle supplier accounts and arrange the next stock delivery.

Pepkor’s proposed merger brings these activities into the same business. The combined company is expected to handle more than R200 billion in annual transaction value, although that figure represents the value of transactions processed rather than revenue earned. Pepkor, which already has an extensive retail footprint through brands such as PEP and Ackermans, is expanding its reach beyond selling goods directly to consumers. Merchant services give the group another way to participate in the flow of money through South Africa’s retail economy.

The question for small retailers is cost

Small businesses have little room for unnecessary expenses. A retailer processing a high number of low-value payments needs to know what each transaction costs and when the money will be available. Those details affect daily decisions. If a supplier needs payment before releasing stock, a delay in receiving funds can leave a shop owner short of the money needed to keep shelves filled.

The combined business could eventually offer merchants a broader range of services through one provider. That may be useful to traders who currently rely on different systems for payments, digital products and supplier transactions. But there is no confirmed announcement that the merger will reduce fees or make payments faster. Merchants will need to see the pricing and service terms before deciding whether the new business offers a better deal.

Supplier payments are part of the opportunity

Shop2Shop’s work with merchants and supplier payments gives the proposed company a place in transactions that happen after a customer has made a purchase. For smaller retailers, buying stock is a constant concern. They need to know how much money is available, what has been paid and whether they can afford another order.

If the combined business makes it easier to track transactions and pay suppliers, it could reduce some of the administrative work involved in running a shop. The benefit would depend on the tools offered and how well they work for businesses with limited staff. It is worth separating this from access to finance. The proposed merger does not, by itself, mean merchants will qualify for loans or receive additional working capital.

Informal traders have different needs

A small shop in a township does not necessarily operate like a chain retailer. The owner may handle sales, stock purchases, supplier calls and payments without dedicated administrative staff. For these businesses, a payment service has to be affordable and reliable. A system that is difficult to use, charges too much or leaves a merchant waiting for support can become another operating problem.

Pepkor’s plan could extend the reach of the combined company across the informal market. Whether that produces better services for spaza shops and independent traders will depend on how the company prices its products and supports merchants. The size of the network matters to Pepkor because it creates opportunities to serve more businesses. For traders, the more immediate concern is whether the service works for the way they operate.

Other payment providers will be watching

The proposed merger would give Pepkor a larger position in merchant payments. Competing providers will still have to persuade small businesses that their services are worth the cost. For SMEs, competition is useful when it gives them real alternatives on pricing, settlement times and customer support. A larger provider may have more resources to invest in technology, but size alone does not guarantee better service or lower fees. The terms offered by the combined business will determine whether merchants have a reason to switch or expand their use of its services.

What happens from here?

The deal was announced in July 2026 and remains subject to the conditions required for completion. Pepkor has set out the proposed ownership structure, but the practical details for merchants will be important as the transaction progresses. Will existing customers see changes to their services? Will fees change? Will merchants be able to manage more of their transactions through one provider? These are the questions that will determine how the deal affects small businesses.

For now, Pepkor is proposing to combine two businesses with established roles in merchant services. The R21.3 billion valuation shows the scale of the planned operation, but the outcome for SMEs will be judged on smaller details: the cost of accepting payments, access to funds and the ease of paying suppliers.