The third edition of payment technology company Mastercard’s SME Confidence Index shows that 90% of small and medium-sized enterprises (SMEs) in South Africa have adopted digital payments.

This finding highlights the increasing shift towards contactless transactions as a means to enhance efficiency, security and business credibility.

SMEs in South Africa are accelerating their digital transformation and seeking new growth opportunities through digital payments and strategic private sector collaborations while sustainability is priority, the report finds.

Additionally, 89% of SME businesses see seamless supplier payments as the most significant advantage of digital payments, while 87% see more efficient multi-channel transactions as advantageous, and 72% identify quicker access to revenue as the most significant advantage.

As South Africa's economy continues to digitalise, SMEs are increasingly recognising the benefits of digital transactions in enhancing business efficiency. Many business owners emphasise the simplicity of payment management, smoother supplier transactions, and quicker access to revenue as key advantages of adopting digital payments.

The index also shows that 79% of SMEs aim to expand their digital payment capabilities across multiple channels, while 62% prioritise sustainability initiatives and 60% focus on enhancing cybersecurity to strengthen their businesses.

Confidence in growth remains steady, and 74% of South African SMEs anticipate maintaining or increasing their revenue this year compared to the prior year.

“South Africa's SMEs continue to adapt to a rapidly evolving economy, and digital payments, sustainability and cybersecurity are becoming key priorities for growth. [Mastercard is] dedicated to providing businesses with the tools, insights and secure payment solutions they need to scale, improve efficiency and build resilience,” says Mastercard Africa division president Mark Elliott.

The company aims to support SMEs in navigating challenges and seizing new opportunities in the digital economy through strategic partnerships and financial education initiatives, he adds.

Meanwhile, the study also reveals that 58% of SMEs in South Africa are looking ahead with growth in mind, with one in three planning to secure credit to support expansion. As businesses scale, 55% identify increasing their sustainability footprint as a key operational priority for the year, Mastercard says.

Additionally, it shows that 92% of SMEs in South Africa identify team management and upskilling as a top area where they require support for long-term success, while 90% identify effective regulatory support as important, and 88% focus on implementing sustainable practices and enhancing environmental, social and governance performance as the top area where they require support to drive long-term success.

“SMEs are the backbone of economies, driving innovation, employment and resilience. As digital transformation accelerates, they are unlocking new opportunities through digital payments and financial inclusion, says Mastercard Eastern Europe, Middle East and Africa president Dimitrios Dosis.

“Their ability to adapt and grow in a rapidly evolving business landscape reflects the strength of an ecosystem that prioritises access to finance, digital enablement and sustainable growth,” he emphasises.

The Mastercard SME Confidence Index serves as a key benchmark for understanding the evolving landscape of small businesses in South Africa.

By working closely with fintech partners, banks and government agencies, Mastercard continues to provide tailored payment solutions, access to financing, and business education programmes that empower SMEs to navigate challenges and seize new opportunities, the company says.

Further, Mastercard remains dedicated to strengthening South Africa’s SME ecosystem and supporting businesses as they adapt to an increasingly digital economy, including by driving digital payments adoption, expanding access to credit to fostering financial inclusion and upskilling entrepreneurs.