Shoprite has acquired 51% of R&A Cellular, the Mpumalanga-based technology company with cellular devices used by informal and semi-formal retailers to process payments and other financial services. 

The acquisition launches the retail giant into the increasingly relevant card payment and devices market. We first investigated this category in August last year, following Nedbank’s purchase of iKhokha. 

Since then, Pepkor announced that it would acquire Shop2Shop (S2S), on a 16x EBITDA multiple, and combine it with its Flash business. 

Payments is an attractive category, which explains the heightened M&A activity. In general, the buyers are attracted by:

• High growth: For example, Shop2Shop has increased revenue 28% pa over three years, and Lesaka’s Merchant division (i.e. Kazang) has expanded by ~15% pa.
   
• Credit unlocked by data: Acting as the gatekeeper of payments received by a merchant offers unrivalled insight into the level and consistency of the merchant’s income – a distinct advantage to any lender when evaluating the credit risk of the merchant.
   
• Supplier payments and cashflow: Aligned to the credit theme, some device issuers negotiate with large suppliers to provide innovative or preferential invoice settlement, based on the ability to track and forecast merchant cashflow.  Shop2Shop indicated that it processed R131bn of payments to suppliers during the year ending March 2026. That’s significant, roughly 65% of the Shoprite Group’s total sales. From Shoprite’s perspective, since many of the merchant suppliers are also their suppliers, the acquisition is yet another lever to maximise total income – something the group is renowned for.
   
• Digitisation of the cash economy – and growth: The proliferation of payment devices is contributing to an ongoing decline in the use of physical cash across the consumer economy. The device issuers can use the data from this to map new growth opportunities: new services to merchants, supply of goods, new store locations etc. 

Shoprite is a mega player in the South African retail market. At the margin, the might of such an entity competing in this dynamic, high-value category may concern investors in the existing device companies. In other words, no matter how big and attractive the opportunities in the sector may be, Shoprite’s acquisition of R&S Cellular directly impacts the prospects of incumbent operators like Flash/S2S, Kazang and others. 

However, Shoprite’s rate of future progress is a function of the starting point of R&A Cellular. How large is it? Who are its customers? Who is its closest competition? Where is it most active?

We’re here to answer those questions.

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