Payments provider Mastercard used its presence at Mobile World Congress 2018 in Barcelona to demonstrate how mobile technology and the internet of things (IoT) is reinventing the payments industry and giving the digitally excluded access to both mainstream credit and the wider economy.
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At the annual mobile trade fair, Mastercard revealed it has teamed up with M-KOPA, a renewable energy supplier based in Nairobi, Kenya, to launch a pioneering partnership that could give millions of Africans access to affordable, safe and clean energy to support their businesses and life goals. More than 600 million people in sub-Saharan Africa live without access to electricity.
M-KOPA already provides solar electricity to three million people and has ambitions to expand beyond its domestic market with support from Mastercard. It will pilot the firm’s Masterpass Quick Response (QR) payment technology to support new means of enabling payments as it expands into neighbouring Uganda in the near future.
“We may take for granted our ability to produce light with the simple flick of a switch,” said Kiki Del Valle, senior vice-president, Commerce for Every Device at Mastercard. “But for many around the world, simple things like having electricity can be life-changing.
“By using our digital payment capabilities, we want to make it easy for people to access reliable and regular sources of energy and become more economically resilient – earn a livelihood by working from home, keep shops and businesses open for longer and study after dark.”
Unfortunately, although solar is an excellent way to give people living off-grid energy independence, it requires a large, one-time investment, so M-KOPA is also using Mastercard to offer users credit to cover set-up costs and pay-as-you-go financing making small daily payments.
Its solution, which consists of a set of lights, a small solar panel and an IoT module to manage billing, costs the end-user $35 (£25) plus a $.50 average daily top-up charge, which on an ongoing basis works out cheaper than refilling kerosene lamps, for example.
Customers can make top-up payments easily and quickly by scanning a QR code on their smartphone, while for those without access to a smartphone, the system also incorporates the ability to enter a merchant ID associated with the QR code into a traditional feature phone.
“Traditionally, consumers may have walked for miles to get wood or kerosene for fuel,” said Del Valle. “Electricity is vital for social, economic and human development, so by providing it, you are able to spur economies in rural markets.
“We think of the IoT as a facilitator of better experiences for consumers, and payments help tie it together. At Mastercard, we believe every device is a commerce device, capable of facilitating payments without a card.”
By getting users to buy into a system where they build up their credit scores over a period of time, M-KOPA eventually hopes to enable them to buy other products, such as solar-powered televisions, more energy-efficient stoves, or smartphone upgrades, using a similar payment scheme.
“We have proven that the pay-as-you-go solar model works in East Africa, but the off-grid market in Africa is tremendous,” said Nick Hughes, co-founder and chief product officer at M-KOPA Solar. “Our partnership with Mastercard provides the roadway for more solar services and infrastructure across the continent.
“QR technology holds great opportunity to extend the range of payment channels for customers and represents a step-change in our mutual goal to light up homes and businesses in Africa.”
For Mastercard’s Del Valle, the success of the project will hinge on generating interest from the Ugandan government. By creating off-grid energy solutions such as solar, M-KOPA and Mastercard can gather information on usage and demand patterns that could then justify government expenditure on more centralised grid technology. Eventually, this could even go beyond electricity to other utilities, she said.
Meanwhile, M-KOPA hopes that the partnership will be easily set up in other countries. By levering the network of MNOs and banks across Africa that already use Masterpass QR, it plans eventually to scale out beyond Kenya and Uganda without needing to spend money on more technology. Masterpass QR is already available in Ghana, Nigeria, Rwanda and Tanzania, which have a cumulative population of almost 300 million.