We tend to think about credit in South Africa through the lens of banks – mortgages, vehicle finance, large loans. But that’s not where most of the activity is.

Beneath that sits a far more active layer of the market: short-term loans, unsecured credit, and credit facilities. This is where retailers, fintechs, brick-and-mortar lenders, telcos and banks all compete for the same thing – the transactional relationship with the consumer. It doesn’t get much attention, but it’s where credit is actually used: to manage cash flow, smooth income, and keep spending going between paydays.

In 2025, more than R170 billion of credit flowed through this part of the market alone. At that scale, it directly influences consumer spending, retail performance, and lender profitability. More importantly, it turns over constantly – used, repaid, and used again – embedded in everyday transactions.

You would expect banks to dominate this space. They own the accounts, after all. But that’s not what the data shows.

A different trend is starting to take shape. The market is shifting toward whoever owns the transaction – and right now, retailers are moving quickly. Take Pepkor. With over 32 million customers and close to 2 billion transactions a year, it sits exactly where spending happens.

If this is where transactions are happening, who really owns the customer?

What the NCR data actually shows

To understand what’s happening, it helps to strip the market back. If you remove mortgages and vehicle asset finance, what remains is a very different kind of credit – short-term lending, unsecured loans, and credit facilities. This is the part of the system that supports everyday consumption, and where competition is most intense.

At a value level, banks still lead, but that lead is narrowing. Over the past three years, their share has declined from 60% to 51%, while non-bank lenders have steadily closed the gap.

Total Value of Credit Granted. (Excludes Mortgages and Vehicle Finance)

The most notable shift is coming from retailers. Their share of total credit value has grown from 15% to 27% over the same period – close to doubling. That is not incremental growth; it reflects a meaningful redistribution of where credit is being issued.

Total Number of Credit Contracts (Excludes Mortgages and Vehicle Finance)

The shift becomes even clearer when looking at volumes. Retailers now account for 54% of all credit issued, up from 41% three years ago. In absolute terms, they have moved from just over 6 million credit agreements to more than 11 million.

This tells a different story. Banks still dominate larger-ticket lending, but when it comes to frequency – how often consumers are actually accessing credit – retailers are now in the lead. This is not happening at the margins. It is happening at scale, and it is changing who interacts with consumers most often in the credit system.

What’s driving the shift

The data points to a clear change in where credit is being issued. The more interesting question is why.

Part of the answer lies in how different lenders are positioned. Banks are built to deploy capital at scale. They manage risk carefully, price over longer horizons, and tend to focus on larger, more established customers. That model works well for traditional lending.

But this segment behaves differently. It is smaller in value, more frequent, and often tied to immediate consumption. Decisions need to be made quickly, and the interaction with the customer happens far more often.

That is where retailers have the advantage. They are present at the point where spending happens, where credit is offered in context rather than applied for separately. Over time, that creates a very different kind of relationship – one that is embedded in everyday behaviour rather than accessed occasionally.

Retailers are not winning because they lend better; they are winning because they are closer to the transaction. And that proximity is becoming increasingly important.

This is no longer just about who issues credit. It is about who owns the consumer – more specifically, who owns the transactional relationship. Banks continue to lead where scale matters. Retailers are gaining ground where frequency, access, and immediacy matter more. As the market shifts toward this more active layer of credit, that advantage becomes harder to compete with.

Pepkor – a signal of where this is going

If the data shows the direction of travel, then Pepkor offers a clear view of where the market is heading.

Pepkor is not just a retailer; it is one of the largest consumer platforms in the country. It serves more than 32 million customers, operates over 5,800 stores, and processes close to 2 billion transactions each year. At that scale, it is embedded in the day-to-day financial lives of consumers in a way few institutions can match.

This position matters. Pepkor sits directly at the point of consumption, where decisions are made and behaviour is formed. It has visibility not just into transactions, but into context – what is being bought, how often, and in what patterns. That creates a relationship with the customer that is continuous rather than occasional.

Now that position is evolving.

With a banking licence in place, Pepkor can expand beyond retail credit into deposits, payments, and card-based products. It can begin to operate across the full financial lifecycle – from transaction to payment to lending.

This represents a meaningful shift. Banks are not disappearing, but they are losing proximity to the transaction, and with it, a layer of insight into everyday financial behaviour. Retailers are moving in the opposite direction, combining distribution, data, and now financial capability.

We are already seeing how the market might respond. Partnerships such as TymeBank and The Foschini Group point to models where balance sheet and distribution are brought together. At the same time, banks, retailers, telcos and insurers are all expanding into broader ecosystems — aiming to become the primary interface through which consumers transact.

Because in this market, owning the transaction increasingly means owning the relationship.

Open finance – the inflection point

If the shift toward transaction-led models is already underway, open finance has the potential to accelerate it.

In theory, open banking is designed to increase competition by enabling third parties to access financial data, with customer consent. In practice, its implications are broader.

The competitive advantage in this market is no longer just capital; it is data. Specifically, the ability to understand how consumers earn, spend, and manage money in real time.

Today, that view is fragmented. Banks hold detailed transaction histories, while retailers hold contextual, real-time behavioural data. Each is valuable on its own. Combined, they offer a far more complete understanding of the customer.

This is where open finance becomes powerful. It introduces a new feature set into credit decisioning – one built on transaction-level insight. New income flows, real spending behaviour, and financial patterns become visible in ways traditional credit systems were never designed to capture.

This has direct implications for financial inclusion. An estimated 20 million South Africans remain underserved, not because they are uncreditworthy, but because they are not visible to traditional models. It is not a demand problem; it is a visibility problem.

Transaction data changes that. With better signals, lenders can assess affordability more accurately, extend credit more confidently, and manage risk more effectively.

But this is also where tension emerges.

While APIs exist, access to meaningful data remains limited. Banks are expected to share transaction data into the ecosystem, but do not necessarily receive equivalent value in return. At the same time, some of the most valuable data – receipt-level, contextual insight – sits outside the open finance framework entirely.

This creates an asymmetry. If open finance is intended to increase competition and inclusion, it raises a broader question: should its scope extend beyond bank data to include a more complete view of consumer behaviour?

Because once that happens, the competitive landscape shifts again.

The opportunity – what the numbers suggest

If better data leads to better decisions, the impact is measurable.

Early indications from transaction data-driven scorecards suggest that approval rates can increase by around 20%, while default rates reduce by a similar margin. Applied to the current market, the implications are significant.

Impact of Transaction Data on Credit Outcomes

A simple comparison of current outcomes versus transaction data-driven outcomes, illustrating the uplift in credit issued (+R34bn) and the reduction in defaults (-R38bn).

This translates into approximately R34 billion in additional credit extended, and roughly R38 billion less lost to defaults. These estimates are directional, but they illustrate the scale of the opportunity.

The result is a system that includes more consumers, allocates capital more efficiently, and operates with lower levels of loss.

The missed opportunity

The shift in South Africa’s credit market is already underway. Retailers are gaining ground at the point of transaction, new models are emerging, and open finance is beginning to unlock better data.

The pieces are already in place.

Banks hold deep transaction histories. Retailers hold real-time behavioural data. Alternative lenders are experimenting with new approaches. Demand for credit remains strong.

Yet these pieces are not fully connected.

Access to data remains uneven. Banks are expected to share data, but do not receive equivalent value in return. At the same time, critical data sits outside the system entirely.

This is where the opportunity is being lost.

Not because the system lacks data, and not because it lacks demand, but because it is not structured to align the two.

A more balanced and open data ecosystem would enable better decisions, broader access to credit, and more efficient capital allocation across the economy.

The opportunity is already visible.

What is missing is alignment – in how data is shared, how incentives are structured, and how the ecosystem chooses to compete.