BusinessCovid19

How Mastercard Plans to Bring 50 Million SMEs into the Digital Economy by 2025

390

Mastercard has set out an ambitious plan of bringing 1 billion people and 50 million SMEs into the digital economy by 2025. In this exclusive interview with African Leadership Magazine UK, the division president for Sub-Sahara Africa shares the company’s strategy towards achieving this plan. Excerpts:

How is Mastercard helping Africa deal with the COVID-19 pandemic?

Mastercard’s is responding to the COVID-19 pandemic in multiple ways at multiple levels, in keeping with our position as both a global and a local technology leader. We are committing funds, technological expertise and thought leadership to address both immediate and mid/long term problems that are emerging due to the pandemic.

Globally, we have committed up to $300 million to support COVID-19 response and recovery efforts. In addition, we are leading a response that offers value to Africa’s consumers, businesses, merchants, financial institutions and governments.

We are doing this not only by ensuring our network remains secure, resilient and reliable, but also, by applying our technology, infrastructure and data science expertise to rebuild healthy communities and ensuring that the focus on doesn’t waiver from inclusive economic growth.

Hence, for example, we are supporting small business owners and their employees around the world and in Africa by committing $250 million in financial, technology, product and insight assets over the next five years to support the financial security and vitality of businesses and their workers.

In the short term, in Tanzania, for example, we have partnered with EYWA and NMB Bank to introduce a no-touch payment solution leveraging our QR technology. This has made public transportation in the country even better organized and safer during this period, enabling consumers to get onto buses without the usual jostling and staying safe.

Similarly, we are working with one of our fintech partners, DPO, to enable businesses across Africa to go online quickly. As you can imagine, some businesses were not ready to deal with the sudden need for social distancing and urgently need support to become eCommerce enabled so they can serve their customers’ need for no-contact purchases.

We are also mindful that consumers have had to shift their work habits to working from home suddenly. We have also tied up with some merchant partners, ranging from Naira box in Lagos and Tuskys in Nairobi to Jumia across Africa to offer consumers value ranging from discounts to free delivery to make their ‘working-from-home’ lives a little easier

Why is Mastercard committed to pursuing the agenda of a digital economy in Africa?

Mastercard has committed itself to the agenda of inclusive growth. We firmly believe that developing economies thrive and that growth becomes sustainable only when it is widely spread. As more people join the formal economy and begin to earn, spend and save, they collectively drive economic growth. It also ensures Governments are able to generate higher tax revenues which can be deployed to generate economic growth. And, of course, when the economy grows, we grow with it. This is all in line with our agenda of “doing well by doing good”.

The digitization of transactions is a key enabler of this inclusive growth.  It is the basis for putting the economy to work for everyone, everywhere, as digital provides a way to scale at low cost. It also supports the Government’s agenda to reducing the inefficiencies in the distribution of services for citizens and to improve the collection of taxes and levies.  Critically, the digitization of transactions reduces the cost of cash in an economy. Mastercard’s research across multiple markets around the world indicates that the cost of cash – printing it, storing and transporting it safely and the government revenue leakage it causes – can be as much as 1.5% of the GDP of a country.

At Mastercard, we see the greatest opportunity in four areas:

Creating pathways for people to become financially secure

Promoting inclusive economic development to help communities thrive

Creating solutions to help workers navigate the changing nature of work

Pioneering the use of “data for good” to tackle the world’s most pressing issues

Mastercard has pledged to bring a total of 1 billion people and 50 million SMEs into the digital economy by 2025. How do you intend to achieve this goal, and why is it important?

Five years ago, we made a commitment to bring 500M financially excluded individuals into the digital economy. Through 350 programs in over 80 countries from 2015 to 2020, we have achieved that goal. However, we are not content to sit on our laurels here – if anything, this has spurred us to dream even bigger. We’re now focused on extending our commitment to taking this number to financially, including 1 billion individuals by 2025.

The reason we’re doing this is simple; it reflects our mission of “doing well by doing good”, of harnessing our insights, technology and expertise to advance inclusive growth and make a substantive and enduring social impact. In fact, we have extended this commitment beyond just 1 billion individuals – in addition, we will support 50 Million MSME/SMEs and 30Million women entrepreneurs in becoming financially included.

Bringing in another 500 million individuals into the digital economy will be achieved through a broad range of efforts. Including ongoing work on government disbursement solutions, digitizing pay for private-sector workers, expanding partnerships with mobile network operators, providing money management and payment solutions for gig workers, scaling up efforts with fintech, digital platforms and digital wallets/apps as well as addressing needs of the financially vulnerable.

For micro and small businesses, the biggest hurdle to growth is not having access to working capital loans. Mastercard’s technology makes it possible for them to digitize their transactions – both sales & purchases – which provides financial institutions with the means to evaluate them for credit. This includes a suite of solutions that reduce both the cost of and the barriers to accept payments digitally. This means reinventing the infrastructure that small shops need to accept digital payments. For example, ‘Tap on Phone’ solutions that allow MSME to turn their mobile phone into a contactless payment acceptance device. Or, new technologies like Mastercard QR that enable consumers even at the bottom of the pyramid to pay via their mobile devices, and, MSMEs to accept these payments digitally.

These types of payment solutions are cornerstones of our efforts to reduce the cost of acceptance.

How is Mastercard involved in pushing their financial inclusion agenda in Africa, and what are some of the achievements?

Over 90 percent of transactions in Africa are still done with cash. Here, we are committed to developing and implementing solutions that make it easier and more convenient for people to use alternative means of payment so that they can enjoy the dividends of being part of the financial ecosystem.

We have been working hard for a number of years to push financial inclusion in Africa. For example, in 2015, we committed to ‘innovating in Africa for Africa’ by launching the ‘Mastercard Labs for Financial Inclusion’ in Nairobi. This innovation hub is committed to innovating digital payment solutions for millions of Africans, building locally relevant solutions underpinned by a deep understanding of the unique challenges and opportunities that exist in Africa. Amongst a number of solutions built here, let me mention three – Jaza Duka, Kupaa and the Mastercard Farmer Network.

The Jaza Duka program has been developed in partnership with Unilever and Kenya Commercial Bank (KCB) and offers a digital platform that allows KCB to provide working capital loans to micro-merchants, based on their purchasing history with Unilever.

Kupaa is a solution we launched in Uganda in partnership with UNICEF Uganda and the Ministry of Education. It enables parents and caregivers to pay school fees and other school expenses with their mobile phones securely, easily, and even in small instalments, thus easing the burden on daily or seasonal wage earners.

Mastercard Farmer Network is a mobile platform that digitally connects small farmers in Kenya, Uganda, and Tanzania with buyers. It improves farmers’ access to markets, increases price transparency and digitizes payments. This then can form the basis for micro-lending to farmers to fund farm inputs.

More recently, we signed a Memorandum of Understanding with the Ethiopian Ministry of Innovation and Technology to develop and implement strategic solutions and policies pertinent to delivering a digitized economy in the country. Under the MOU agreement, Mastercard will bring to bear its global technology platforms and apply its insights and experience from working with governments around the world in supporting Ethiopia to achieve its digital transformation objectives. These activities will directly support efforts towards driving financial inclusion, creating safe and accessible digitized payment solutions for small businesses and implementing digital identity projects.

In Nigeria, we partnered with NetPlusDotCom and to provide micro, small and medium-sized enterprises (MSMEs) with digital payment tools to advance their business through their self-onboarding digital platform, Merchant Digital. So far, 1 million MSMEs have been onboarded on the platform that can be accessed online by all small businesses and micro-merchants in Nigeria.

Are mobile money transfer services a threat to card services providers like Mastercard, and what are the opportunities for collaboration?

Not at all – on the contrary, we see mobile money services provided by various MNOs as a great platform to advance digital financial inclusion in Africa. We work very closely with mobile operators in multiple markets to build the domestic payments ecosystem, both for usage and for acceptance

The challenge in Africa is one of scaling efficiently at a reasonable cost. We have built technologies like Mastercard QR that allow us to partner with MNOs, leveraging their customer base and reach. This technology offers the advantage of the ease of access, convenience and safety for consumers while allowing merchants a low-cost solution and easy to implement a way to accept digital payments.

Tanzania is a great case in point. Through our partnerships with mobile network operators such as Airtel, Tigo & Vodacom, and, with our fintech partners like Selcom, we have enabled over 20 million users of Mastercard QR and VCNs (virtual card numbers) and over 50,000 merchants in Tanzania. This includes everything from Puma petrol stations to Boda-Boda drivers as well as enabling mobile wallet holders to shop online for the first time!

We are, of course, extending this further. In 2019, for example, Mastercard entered a partnership with Airtel Africa to enable over 100 million mobile phone users across 14 African countries to access Mastercard’s global network through VCNs and QR payments. We will be building similar alliances with other MNOs.

Fintechs are vital for the growth of a digital economy. How is Mastercard helping fintechs thrive?

Fintechs are crucial building blocks of the digital economy. We recognize their ability to innovate at speed, identify and solve local problems cheaply and scale at low cost. We have therefore focused on building deep strategic partnerships with fintechs across Africa, and indeed, across the world.

Mastercard is the partner of choice for the top Fintech brands worldwide, and in 2019 we launched Mastercard Accelerate, a global initiative that simplifies the way that Mastercard works with fintechs. This offers a simple, single entry-point to Mastercard’s wide portfolio of specialized programs, giving start-ups and emerging brands the support and assistance they need at every stage of their growth and transformation, right from market entry to global expansion.

For our financial institution partners and customers, Mastercard Accelerate provides access to the next generation of innovators, with a portfolio of start-up partners and fintechs ready to co-create and collaborate on new experiences. Accelerate is comprised of a range of award-winning programs – Mastercard Fintech Express; Mastercard Engage (launched in Nairobi in April 2019 with hundreds of fintechs already signed to our platform); Mastercard Start Path (over five African fintech’s have run through this programme including Kasha, Mfarmpay, Lidya and Lipa Later). And Mastercard Developers, which has helped participants from all over the world access and benefit from Mastercard’s ecosystem, customers and innovations.

Leave a Reply