The Kazang and Connect operations have brought diversity to Lesaka with exposure to different market sectors and revenues. Before getting into the numbers, I’d like to briefly recap what we see as the opportunity in the Merchant Division. With our comprehensive product portfolio covering both cash and digital, and formal and informal markets, Lesaka’s unique position allows us to benefit from both the significant reliance on cash in the South African economy and the rapid shift to digital that is currently taking place. This shift opens up opportunities for us to pioneer informal markets and disrupt the incumbents and traditional ways of transacting in the formal markets. We rely on being innovative and responsive to the needs of our merchants, quick development turnaround times and getting product onto the street.
We take calculated risks, learn quickly, and are adaptable. We are instilling this culture across the group as we fight for success in these competitive markets. As Chris mentioned earlier, we are a formidable competitor in the Fintech space across any considered key metric. Critical to our strategy is the holistic offering we have for our merchants. We have numerous competitors on an individual product basis, but our holistic solution is a significant and durable differentiator. We have always said the SME sector is critical to the South African economic growth, and we need to assist these merchants to compete and grow, which we achieve through providing solutions that resolve their critical business issues and pain points. As a Fintech company, this holistic approach is unique and disruptive.
From cash vaults and immediate digitization, quick access to capital for growth and opportunities, a comprehensive VAS product suite to attract customers to merchant stores, to supplier payment systems and industry-leading payment technologies, we offer solutions that make a meaningful difference to our merchants’ daily trading, risk management, and business administration. We will entrench and extend our position in the informal and formal MSME markets by continuing to embed ourselves as a partner to our merchants and by offering real value. We now offer four primary solutions to both formal and informal merchants. Our portfolio of products results in increased customer adoption driving higher volumes of sales for merchants. We utilize our proprietary infrastructure to offer merchants and their customers what they need.
We provide merchants with a POS device linked to a digital wallet from which they can pay suppliers, sell many VAS products, make bill payments, take customer payments via card swipes or tap and pay, whilst providing instant settlement. Merchants are also able to access funding and a smart vault via the device. For us, as Lesaka, partnership with a merchant usually starts with a VAS device. This drives growth in all products, more merchants, more devices, more wallets, more product flow. By way of example, more than 60% of Kazang merchants that have our VAS device in store convert to also utilizing our Kazang Pay offering, which can then be followed by Kazang Pay Advance. This deeper relationship with merchants increases our value and stickiness to them and is key to our strategy.
Our VAS throughput in Q4 has seen growth of 23% compared to Q4 2022, and a 30% increase year-on-year for the 12 months despite the increase in load shedding that we witnessed during 2023 and particularly in Q4. Our product development team continues to innovate and provide merchants with a comprehensive product set to attract customers into their stores. From a device perspective, we have increased our estate by 47% in the past 12 months and 4% in Q4 compared to FY 2023 Q3 to approximately 75,000 devices. On a quarterly comparative basis, in Q4 we saw a significant change in product mix for VAS sales, with low margin money transfers reducing significantly. While we saw a retraction of 7% in throughput primarily due to this, the impact on the bottom line was negligible with our gross profit earned on VAS increasing during the quarter.
Adjusting for money transfers, we saw an increase in throughput of 3%. It’s hugely pleasing to show growth despite our merchants’ substantial loss in trading hours in Q4. During Q1 to Q3, we installed a significant number of devices at informal merchants in order to support supplier payments to two major beverage companies in South Africa. During Q4 and into Q1’24, we focused on making sure that these devices are processing appropriate volumes and removing the sub-economical devices. This pattern of on-boarding and cleaning up is an expected occurrence in the Kazang business when major partnerships are initiated. In our card acquiring business, we continue the excellent growth in our estate and throughput. Our installed POS devices increased to 44,900 representing a 98% year-on-year growth and a 7% quarter-on-quarter growth compared to Q3 ’23.
This robust growth in devices demonstrates the frictionless process of converting VAS devices to POS devices and we are confident we will continue expanding our market share in the informal market. From a throughput perspective, Q4 ’23 versus Q4 ’22 was up 83%, with FY ’23 versus FY ’22 up 97%. In Q4, we saw a 5% increase in throughput compared to Q3 ’23, which was impacted by the challenging conditions and reduced trading hours and disruption due to load shedding through the quarter. We saw a slight pullback in credit extension in our merchant credit business in Q4 as we tightened our credit criteria in response to the higher interest rate and inflationary pressures in the economy. This resulted in ZAR 262 million credit disbursements in Q4 compared to ZAR 280 million in Q3, with our loan book reducing to ZAR 333 million at year-end, marginally down from ZAR 343 million at 31 March, 2023.
