Mastercard says it will collaborate with Durban-based tech company Spazapp to bring mobile payments to informal traders and convenience stores, better known as spaza shops, in South Africa.

The payments company says combining its expertise and reach with that of Spazapp will unlock economic growth by helping informal micro-businesses connect to formal markets and digital payment systems.

Mark Elliott, division president for Mastercard Southern Africa says although the informal retail sector boasts R46 billion in annual sales, with more than nine million households regularly shopping at these stores, too many informal micro-retailers are stuck, like their customers, in a cash economy that doesn't work in their favour.

"By matching up Spazapp's extensive supplier and distribution network with digital payment and acceptance solutions from Mastercard, we are able to help these shop owners build a better future and serve their customers who are themselves demanding safer, and more convenient ways to pay."

Mastercard says it has now integrated its digital global payment service Masterpass into Spazapp. Traders using Spazapp can now order a wide variety of products at competitive prices and use Masterpass to digitally pay for stock and accept cashless payments from their customers with their mobile phones.

"By digitising the entire value chain, the 4,500 micro-businesses already using Spazapp's buying app can generate significant savings on stock procurement. Traders no longer need to close their stores to buy stock, miss out on bulk buying savings because of cashflow constraints or have to worry about the security risks and high costs of cash," added Mastercard in a statement.

Tim Strang, CEO of Spazapp, a free android application that connects informal traders directly to big FMCG brands, including Unilever and Tiger Brands, says their goal is to uplift last mile traders and disadvantaged communities by simplifying the buying process for small, informal traders through competitive pricing and collective bargaining power.

"Masterpass has the scale, efficiency and convenience we need to offer merchants a truly accessible, low-risk and affordable way to accept electronic payments from their customers and pay their suppliers."

Spazapp has currently has networks established in South Africa, Mauritius and Botswana although its website reveals plans to spread to East Africa and Nigeria in the near future.

Ajay Banga, Mastercard president and CEO met with informal traders in Johannesburg ahead of the deal announcement.