Fintech is still growing at pace – globally and in South Africa – but the nature of that growth is changing.
Global revenues reached about $650 billion in 2025, while locally, payment volumes, embedded finance, and Buy Now Pay Later (BNPL) continue to expand. What both sets of data point to is an industry moving beyond early-stage expansion into a more mature, regulated and competitive phase.
According to a report by McKinsey & Company, this reflects a move towards a more developed stage of fintech, where firms are expected to balance growth with sustainable unit economics, operate within clearer regulatory frameworks, and compete increasingly on distribution and trust rather than product differentiation.
Data from the Fintech Association of South Africa (FINASA) indicates that similar dynamics are emerging locally, with the sector entering what it describes as a “pivotal phase”, where growth, regulation, and technological change are converging.
That shift is already visible in how the South African market is scaling and where activity is concentrated.
Scale and momentum: growth across key segments
This momentum is reflected across multiple fintech segments, according to FINASA.
The embedded finance market reached R292 million in 2025 and is projected to grow to R3.95bn by 2030. BNPL transactions reached R815.1m and are expected to increase to R1.3bn over the same period.
Transaction volumes have increased sharply. South African consumers completed more than 118 card transactions per person in 2025, with total card volumes reaching R2.9 trillion and growing at 10.4% annually.
Across the continent, digital payments networks expanded by 45% in 2025, with South Africa positioned as a central driver of this growth.
Alternative lending is also gaining traction, with personal loan originations increasing by 11.5% year-on-year in the first quarter of 2025 and 35% of consumers indicating plans to access alternative credit.
Where fintech adoption is concentrated
Current usage data points to three areas of concentrated activity: digital payments, embedded finance, and cross-border transactions.
Digital wallets are now widely used, with Google Pay adopted by 37% of users, followed by Samsung Pay at 21%, and Apple Pay at 18%. Apple Pay’s conversion rate is at 90%, with half of transactions settling in under three seconds.
Speed and reduced friction are reshaping expectations around payment processing.
Embedded finance now extends beyond payments into lending, insurance, merchant cash advances, and other services delivered within digital platforms.
Credit, insurance, and settlement functions are increasingly integrated into e-commerce platforms, marketplaces, and supply chains – a shift described as “the inverse of the ‘financial supermarket’ model of the 1990s, it’s disaggregation masquerading as integration”.
Cross-border payments are undergoing what has been described as a “quiet revolution”.
The Pan-African Payment and Settlement System (PAPSS) now connects 17 countries, with 14 national switches and more than 150 commercial banks participating.
Standard Bank has joined China’s Cross-border Interbank Payment System (CIPS), enabling renminbi transactions without US dollar intermediation, while cryptocurrencies are reducing remittance costs by up to 60%.
Funding, scale-stage growth and consolidation
Funding patterns point to a shift in how capital is being deployed across the fintech ecosystem.
African tech startup funding reached $1.64bn in 2025, up 46.2% year-on-year after two years of decline. South Africa was a primary beneficiary, with 42 startups raising a combined $335.9m – a 234% increase from $100.4m in 2024. Fintech accounted for $124.97m of this total, representing 37.2% of all funding in South Africa, ahead of sectors such as energy, AI/IoT, and agritech.
The composition of funding is also changing. Average deal sizes nearly doubled to $7.99m, while only 63.2% of disclosed rounds were pre-Series A – a lower proportion than in peer African markets. This indicates a greater share of capital being directed towards more established businesses.
This is reinforced by rising consolidation. Mergers and acquisitions increased by 72% year-on-year, with 67 deals recorded in 2025, with fintech leading activity in this area.
At a continental level, funding remains concentrated. South Africa, alongside Egypt, Nigeria, and Kenya, accounted for 72.5% of funded startups and 88% of capital raised across Africa in 2025.
Recent deal activity reflects continued investment in fintech infrastructure and lending platforms. In February 2026, SME-focused lending platform Lula secured R340m ($21m) from development finance institution FMO, structured in local currency to remove exchange rate risk for on-lending.
BNPL: growth meets regulatory pressure
BNPL is expanding rapidly but remains one of the most contested areas from a regulatory perspective.
Transactions reached R815.1m in 2025 and are projected to grow to R1.3bn by 2030.
At the same time, the product category sits within a regulatory grey area, with overlapping mandates and no single, clearly defined framework.
Lerato Lamola, a partner at Webber Wentzel, notes that research by the Intergovernmental Fintech Working Group found BNPL currently falls into a regulatory void. Clarification is expected on whether these products fall under the National Credit Act (NCA) or the Financial Advisory and Intermediary Services Act.
Read: Key fintech policy developments to watch in 2026
The National Credit Regulator oversees compliance with the NCA, while the Financial Sector Conduct Authority is responsible for FAIS. Further engagement between regulators and industry is expected during 2026.
Regulation and infrastructure: reform, alignment and what comes next
Regulatory reform and infrastructure development are becoming central to the next stage of the sector, with multiple initiatives progressing in parallel.
At a legislative level, Enoch Godongwana has given notice of the introduction of the Conduct of Financial Institutions (COFI) Bill, 2026, in the National Assembly. The draft Bill has not yet been released publicly, with National Treasury indicating that it is still undergoing legal scrutiny and may take time to publish.
Read: UPDATED | Minister gives notice of COFI’s ‘introduction’ in National Assembly
The COFI Bill is expected to play a central role in defining conduct regulation across the financial sector, including how newer fintech models – such as embedded finance and BNPL – are supervised.
Alongside legislative reform, structural changes to the payments system are under way.
The South African Reserve Bank’s Payments Ecosystem Modernisation Programme introduces a National Payments Utility, new real-time and regional payment systems, and an activity-based licensing framework that will allow non-bank entities – including fintechs and retailers – to participate directly in payment activities. Implementation is expected in the second half of 2026.
Parallel workstreams are also in progress, including frameworks for stablecoins, open finance, and artificial intelligence, as well as amendments to exchange control regulations to incorporate crypto assets.
South Africa’s exit from the Financial Action Task Force’s grey list in October 2025 has reduced friction in cross-border transactions, although some counterparties continue to apply enhanced due diligence.
Infrastructure developments are also expanding connectivity between national and regional payment systems.
Integration between PesaLink and PAPSS, new instant payment corridors, and stablecoin-based settlement mechanisms are improving the efficiency of cross-border transactions, aligning with African Continental Free Trade Area’s objectives.
The next phase: regulation, cross-border competition and trust
Three dynamics are expected to shape the next phase of the industry, according to FINASA.
Formal regulatory definitions are expected to accelerate, particularly in areas where products have outpaced existing frameworks. BNPL is likely to be the first category formally defined, with outcomes expected to influence how broader embedded finance models are regulated.
At the same time, cross-border capability is becoming a key competitive frontier, as new infrastructure reduces reliance on traditional banking intermediaries and lowers the cost of moving money across borders.
Trust is also becoming a central differentiator. As noted in the FINASA material, “fintechs that compete on speed alone will lose”, with advantage shifting towards firms that can demonstrate transparency, security, and customer control.
