Technology for MSMEs: Payments company Mastercard has entered into a strategic partnership with social impact organisation Samhita-Collective Good Foundation (Samhita-CGF) and digital payments company Mswipe to pull 1 lakh micro merchants particularly from Tier-II to VI cities into the digital fold. Mastercard and Mswipe will join the Revive Alliance finance platform by Samhita-CGF, which is supported by the U.S. Agency for International Development (USAID) and other investors, to provide a ‘digital payments incentive programme’ for micro merchants along with capacity building training, said Mastercard.
The bank-agnostic programme will offer payment settlement for merchants via prepaid card without a bank account. The merchants would have access to Mswipe’s support for product training and client engagement as well.
“Micro merchants across Tier II-VI cities are often neglected by traditional payment facilitators. To remain competitive, merchants must adapt to changing consumer demands and start accepting digital payments…The solution (announced) is customised to reduce the barriers that often prevent micro-merchants from adopting digital payments, including zero installation fee for the POS device and zero monthly rental fees. It will also help them increase their sales and serve more customers,” Vikas Saraogi, Vice President – Acceptance, South Asia, Mastercard told Financial Express Online.
In October, Mastercard along with HDFC Bank, U.S. International Development Finance Corporation (DFC), and U.S. Agency for International Development (USAID), had launched a $100 million credit facility to help digitise small businesses in India. In June this year as well, Mastercard had made a strategic equity investment in e-commerce solutions provider Instamojo to help MSMEs and gig workers set up their online presence.
“As micro and small businesses form the backbone of the Indian economy, today’s initiative is a positive push towards Mastercard’s worldwide commitment to bring 50 million micro and small businesses into the digital economy by 2025,” added Saraogi.
Technology enterprises have been betting on the vast population from India’s hinterland getting into the digital payment economy as the internet and affordable mobile devices penetrate and proliferate further into the country. Propelled by policy framework and technology penetration, digital payments is likely to jump at a compound annual growth rate of 27 per cent during the FY20-25 period. The growth in retail electronic payment systems including National Electronic Fund Transfer (NEFT), mobile banking, and development of payment acceptance infrastructure is likely to boost digital payment transactions from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, according to the India Trend Book Report 2021 by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young.
Among payment segments, the payment gateway aggregator market is expected to grow at around 19 per cent CAGR from Rs 9.5 lakh crore in FY20 to Rs 22.6 lakh crore in FY25 while the merchant payments segment is likely to see 52 per cent growth from Rs 4.7 lakh crore to Rs 33 lakh crore during the said period. The maximum growth is likely to be witnessed in the mobile payments segment at 58 per cent from Rs 25 lakh crore to Rs 245 lakh crore.
“While small and medium businesses have been fast adopters of digital acceptance solutions, micro businesses are still facing entry-level barriers of ease, access and affordability and continue to be driven by cash-based transactions. With this partnership, we want to solve the infrastructure challenges, offer convenience, and create a secure and convenient way to bring new businesses and digital micro-merchants, especially from Tier II to VI towns, into the digital ecosystem,” said Ketan Patel, Chief Executive Officer, Mswipe.