India’s approach to banking its unbanked population, limiting large cash withdrawals, subsidising affordable smartphones and building mobile-first payment infrastructure, offers South Africa a working example of how financial inclusion and small business growth are directly connected. A larger share of the population able to transact digitally means a larger addressable market for every small business selling to consumers.
Financial inclusion is not simply a social development goal, it has a direct commercial impact, since consumers who cannot transact formally cannot easily become customers of formal small businesses either. Countries that have made faster progress on inclusion tend to see the benefit reflected in small business growth as well.
Mobile-first infrastructure reaches populations traditional banking cannot
India’s push toward mobile payments succeeded partly because it did not require the population to first gain access to traditional banking infrastructure, branches and physical infrastructure that are expensive and slow to build at scale. Mobile-first payment systems can reach a far larger population far faster than physical banking infrastructure ever could.
Affordable smartphones are a prerequisite, not an afterthought
Financial inclusion strategies that assume smartphone access rather than actively working to expand it tend to under-deliver, since the population most in need of inclusion is often the same population priced out of smartphone ownership. Subsidising or otherwise expanding affordable device access has proven to be a necessary companion to any mobile-first financial inclusion strategy.
South Africa’s own financial inclusion progress
South Africa has made meaningful progress on financial inclusion through mobile banking products and lower-cost transactional accounts, though gaps remain, particularly in rural areas and among informal sector workers who transact largely in cash. Continued progress here directly expands the pool of customers South African small businesses, particularly those serving lower-income consumers, can realistically reach.
Why this matters directly for small business owners
A small business that can accept digital payment from a customer who previously could only transact in cash gains a customer it could not previously serve efficiently, and the reverse is also true, a business that cannot yet accept the payment method a newly included customer prefers risks losing that customer to a competitor that can. Financial inclusion trends are, in this sense, a direct signal for where small business payment infrastructure should be heading next.
Practical steps a small business can take now
A business does not need to wait for national inclusion figures to improve before acting; reviewing which payment methods are currently accepted against what the actual local customer base is asking for is a useful starting point, particularly in areas where informal or cash-based transacting is still common. Partnering with a payment provider that supports lower-cost, mobile-based transaction options, rather than assuming a traditional card machine is the only route to accepting digital payment, often opens up a segment of customers a business did not previously realise it was missing.
Frequently asked questions
How is financial inclusion directly relevant to small business owners?
A larger share of the population able to transact formally and digitally directly expands the pool of customers a small business can serve, particularly for businesses targeting lower-income consumers who were previously limited to cash transactions.
Why did India’s mobile-first approach succeed at reaching underserved populations?
Because it did not require building expensive traditional banking infrastructure first, mobile payment systems could reach populations that physical bank branches would have taken far longer and more capital to reach.
Does affordable smartphone access actually affect financial inclusion outcomes?
Yes, significantly. Financial inclusion strategies that assume smartphone access without addressing affordability tend to under-deliver, since the population most in need of inclusion is often priced out of smartphone ownership.
Where does South Africa still have financial inclusion gaps?
Rural areas and the informal sector remain the areas with the most persistent gaps, with many workers in these segments still transacting predominantly in cash.
Should small businesses actively track financial inclusion trends?
Yes, particularly businesses serving lower-income consumers, since these trends are a direct signal for which payment methods and channels are worth investing in next to avoid losing newly included customers to competitors.
Further reading
Originally published in February 2017. Updated September 2026 to connect India’s financial inclusion approach directly to South Africa’s own progress and its impact on small business customer reach.
