Inclusion is a laudable goal – bringing the world’s 1.7 billion unbanked and underbanked into the global digital marketplace is an almost undisputed good. But it’s also a notoriously difficult problem to solve, especially in places like sub-Saharan Africa where mobile penetration is high. However, the majority of consumers are still using feature phones, not smartphones that connect to the internet and the app economy that could accelerate that. to access.
In these environments, MasterCardJorn Lambert’s executive vice president of digital solutions told Karen Webster that the landscape has always been very defined in terms of “haves and have-nots” across a range of things, including access to mobile technology. But, from 2020, the trend lines start to move differently.
“Today, if you look at the African population, the region is on the verge of moving quite quickly from feature phones to smartphones, giving people access, frankly, to information, experiences and services that they don’t. ‘have ever had,” Lambert said, noting the price of phones and data are falling as 4G supplants 2G/3G in developing economies around the world. Mobile technology and the host of capabilities it opens up to consumers and small and medium-sized enterprises (SMEs) across the region are poised to exacerbate inequalities up to the first stage of building “inclusion digital and, ultimately, through this financial inclusion”. .”
And to help push that past the tipping point, he noted, Mastercard and Samsung have in partnership to build the last-mile bridge needed to fuel this transition to smartphone technology in Africa – its new on-demand payment platform and solution enables consumers to access devices on a pay-per-view model use.
The era of streaming services and sharing, Lambert told Webster, has changed the shape of what “ownership” means, which is less about owning something and whether or not you have the funds to get it — and more about owning access and being able to leverage that access well. Consumers in Africa, he noted, have not had this access, due to technological backwardness driven by a lack of knowledge that has kept devices out of consumers’ reach.
MasterCard hopes to be able to change the math, and therefore the accessibility of these devices and fuel all the innovations that may follow when hundreds of millions of consumers who have been absent from the app economy suddenly gain meaningful access to this one.
“I think it’s not so much about the technology, the technology is there and we have ways to really make it work to make it accessible to everyone. It’s really about bringing the right pieces together, bringing them to consumers and to the market, and unleashing the innovations that couldn’t happen and now can.
Fill the remaining void
The price of smartphones has come down in recent years, but not to the point that the average emerging middle-class consumer in Africa would find them affordable in a single purchase. Funding, however, would make mobile devices affordable, the problem is that such plans did not exist in Africa until now. A customer can either pay for the item directly or live without the item. There was no model to roll the cost of the phone into the cost of the monthly subscription or into an on-demand/usage-based plan.
Lambert told Webster there was a simple reason for this.
“People [in Africa] don’t have a credit score, so there’s really no way for mobile operators to assess risk,” Lambert explained, adding that it was difficult for mobile operators to grant credit to these people.
What Pay on Demand does is step in and replace that large upfront payment for a phone with access to the phone subject to usage for a minimum fee and then a usage-based fee that the customer do. Underpinning this access, he noted, is a lending market populated by telecom companies, NGOs, alternative lenders and even traditional banks, to provide these consumers with a multitude of options for fund these phones.
“A consumer will pay a small upfront sum assuming they will pay a certain amount per month as a user. And as they do, they pay for their usage beyond that, which is not so much as that. “
The technology, he noted, is similar to that offered last year to Kenyan consumers interested in purchasing IoT-enabled solar panels. A similar principle is at play here, but with an eye to unlocking the fuller capabilities that smartphone technology can unlock.
The platform is secured by Samsung’s Knox integrated security platform to ensure the integrity and security of consumer data and transactions. The platform also leverages the inherent payment capability of mobile technology – with the ability for consumers to obtain a virtual card that can be used to pay on their device and then as part of a digital wallet to make transactions. available wherever Mastercard is accepted. African consumers, he noted, are accustomed to mobile money and, in fact, have higher mobile wallet adoption rates in some places than consumers in developed markets. The addition of Mastercard credentials opens up the number of digital nodes these consumers can connect to to transact, making it more of a complement and extension of local wallets than a competitor.
But the most interesting part of the platform, he noted, is what they don’t know yet, but will see as it grows in Africa and beyond the world – the new things that it enables both consumers and SMEs in a region.
Changing Ownership Modes and Expanding Opportunities
Across the African continent, many micro-traders are successfully running a business and running a successful entrepreneurial lives – which are almost impossible for a financial institution to value because they are cash-based and therefore invisible. An entrepreneur, if he works through the Pay on Demand platform, will receive a smartphone, which in itself is a useful tool. But she’ll also create a data profile, a record of payments for a product she buys – a way out of the shadow of money and into the light of digital payments that make her assessable for funding things that are not telephones. In this case, the opening of a door can trigger the opening of several doors.