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The Challenge

Spaza shops play an important role in South African communities, providing convenient access to food, household goods and essential services.

However, many spaza shops still rely heavily on cash. Existing digital payment options may involve high transaction costs, expensive hardware, complex onboarding, delayed settlements or systems that do not work easily across different payment providers.

This can make it difficult for small businesses to adopt digital payments while maintaining control over their costs and cash flow.

The numbers​

The scale of the informal payment economy is significant:

  • Approximately 150,000 spaza shops operate nationally, contributing around 5.2% of GDP and supporting roughly 2.6 million livelihoods
  • Informal retail accounts for around 30% of South Africa's total retail market, and as much as 40–50% of grocery sales in township communities
  • Nine out of ten transactions in South Africa are still completed in cash, with cash dominance close to 90% in the informal sector
  • R19.3 billion was remitted from South Africa to SADC countries in 2024, at an average cost of around 12.7% - over four times the G20 target of 3%

The hackathon question​

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How might we use open and interoperable payment technology to make digital payments more accessible, affordable and practical for spaza shops?

Why open, interoperable payments?​

The Interledger Protocol (ILP) and Open Payments are designed to complement existing payment systems rather than compete with them. Three properties make them a good fit for the South African problem:

  • Open and currency agnostic. ILP transfers value between any pair of ledgers, including non-bank stores of value such as mobile money wallets, prepaid balances and fintech accounts. It can route from a bank account to a mobile wallet to a cross-border recipient on a different ledger entirely.
  • A clean developer primitive. Open Payments wallet addresses work like URL-based public aliases for accounts - analogous to email addresses. Any Open Payments enabled application can request quotes, obtain user consent and initiate payments through a single, standard interface, without holding sensitive credentials or integrating with each bank individually.
  • Aligned with where local rails are heading. South Africa's instant payment systems are built on ISO 20022 messaging standards, which converge with what ILP and Open Payments expect at the edges. Solutions built on Open Payments today are not orphaned from the direction of the local ecosystem.

In practice this means a shopper could pay any merchant who exposes a wallet address - no point-of-sale device and no closed-loop scheme lock-in - and low-value, peer-to-peer flows (such as stokvel contributions) become simple programmable payments.

See Technology & Resources for the full stack teams will work with.

What solutions might explore​

  • Low-cost digital payment acceptance
  • Payments without expensive point-of-sale hardware
  • Interoperability between different wallets or payment providers
  • Faster or more transparent settlement
  • Offline or low-connectivity payment experiences
  • Simple onboarding for shop owners
  • Better transaction records and payment visibility
  • Customer loyalty or community-based payment features

Teams do not need to solve every issue. Choose a specific part of the problem and address it well.

How the hackathon works​

The hackathon follows four stages, from understanding the problem to pitching a working prototype:

  • Understand the challenge. Review the problem brief and learn how spaza shops handle payments today - the costs, the friction and the workarounds. From there, identify one focused problem your team wants to address rather than trying to solve everything at once.
  • Define your solution. Develop your concept: who your users are, the use cases you are targeting and the payment journey you propose. A clear, well-scoped design makes the build phase far more productive.
  • Build a proof of concept. Use the Interledger and Open Payments technology, documentation and support sessions to create a functional or partially functional prototype. Workshops and mentors are available along the way - a focused prototype that works beats an ambitious one that doesn't.
  • Present your solution. Submit your presentation, recorded walkthrough and demo link for the judging panel to review, explaining the problem you chose, your solution, the technical implementation and the potential impact for spaza shops and their communities. The top five teams are invited to pitch live at the in-person Grand Finale.

See what teams must submit and the judging criteria for full details.