One of the stakeholders in the local cashless economy pursuit is Mastercard, a multinational financial services corporation which connects consumers, businesses, merchants, issuers and governments around the world. In Rwanda, they often feature as partners for a number of banks to facilitate card-based payments on point of sale devices and cashless transfers among other roles. With the digital payments market currently characterised by innovation, disruption and partnerships, players like Mastercard have had to mull and roll out new approaches and strategies at a faster pace. Raghav Prasad, the President of Sub-Saharan Africa Division at Mastercard, spoke to Business Times’ Collins Mwai on their approaches to stay relevant, impactful and trends defining digital payments and financial inclusion. Excerpts below: Mastercard is increasingly becoming a household name in the East African region, beyond facilitating payments, what other roles are you in position to play? We are passionate about Africa, East Africa and participating in the development of digital ecosystems. We have been very engaged with Africa and the East African region over the years. There, however, has been renewed passion in recent years, in the region owing to factors such as the fact that Africa and the East African region will be among the part of the world that will be the growth opportunities for Mastercard going forward. If you listen to our CEO, he often stresses that growth will be experienced in China, India and Africa. This is where the emerging middle class are, this is where cash continues to be the most prevalent form of payment, 95 per cent in Africa. From a philosophical approach of doing business, Mastercard is passionate about financial inclusion. We believe in the philosophical approach of doing well by doing good. We want to facilitate the process of financial inclusion. Globally, we have committed to include $500 million consumers of which $100 million will be from Sub-Saharan Africa. We believe that the development of Africa is inexplicably tied to financial inclusion. In our case, our view of financial inclusion is not just person to person, its access to financial services. If you look at how we are going about doing this, we have set up an innovation centre in Nairobi for financial inclusion. All we do there is create products for financial inclusion. We create products for farmers, SMEs among others. Our engagement is informed by the view that this is the long term future of the global economy and also our emotional connection to drive inclusion. Speaking of financial inclusion and access to financial services, most operators in the informal sector are not eligible for credit, in Rwanda and across Africa... It is important to take a step back and ask why. The reason why access to credit is poor is that there is no data that lenders can rely on to make the credit decision. When one is doing all their transactions in cash, there is no data, if the transaction are digital, there is data and a record of what you have bought, sold. With records, there is an estimation of risks hence improving chances of lending. Our role is to help create the platforms that allow the digital transactions to happen and consequently gather data. Does it concern you that less than half of the East African population is formally banked? If there are platforms that allow businesses and consumers to access financial services without requiring them to have a bank account, it’s a good thing. Eventually, as Micro-finance institutions come in, they can consider what products to take on. We believe that accessing financial services is the first step to be financially included. After that, it is up to the banks, micro-finance institutions and other lenders to encourage the clients to get more services. We see our role as helping create the infrastructure and platform without necessarily opening a bank account. What have you found to be the interest of banks and other financial institutions in digital payments and financial inclusion ambitions? The desire to go digital and go cashless is very high. When we talk to our banking partners, we find that everyone understands that the African consumers, especially in EAC are very tech-savvy and prefer not to go to a physical brand and can do all transactions on their phone. There is also tremendous entrepreneurship. Fintechs are booming and are solving challenges that banks cannot, they are more agile, lower costs and can offer services faster. What we are doing as Mastercard, we are aware that we need an army in the ‘war against cash’ and everyone needs to be on it. The appetite is there, it’s about catalyzing it. What of clients’ reception? To change consumers’ habits often takes time. Fundamentally, we are in the trust business. What we are bringing is capabilities and technologies that clients are safe and secure, and encrypted. We also ensure that all our payments are push payments to reduce the chances of fraud. We are currently seeing transactions growing to show that consumers have higher trust and confidence. A study published this year, ‘Client Voices; Rwandans Speak on Digital Financial services’, showed that safety remains a key concern for clients and could hold back the growth of digital payments. What are your thoughts on clients’ perception to safety? At the end of the day, it’s about trust and comfort. The infrastructure used in this system is tailored to our standards, hence guaranteeing security and we are constantly investing in safety and security. Last year, we probably spend about $1 billion on cybersecurity. What our partners who interact with consumers do is based on rules and regulations that we agree with them. There are also rules and regulations that determine certain things such as loss of cards to reduce risks among consumers. We also have set rules when working with our merchants. What opportunities exist for Rwandan small and medium enterprises as you roll out all these initiatives? The opportunity is so huge and the challenges that we can solve are huge. We are open to working with partners across the value chain, from banks to fintechs (small and large). We have programmes to work with fintechs where we incubate them to grow to a capacity where they can solve bigger problems. What’s on your checklist when seeking partners, especially among SMEs? What we seek is passion. We seek partners who are passionate to solve the same problems we are out to solve. We also seek partners who are agile, have a sense of urgency, and can visualise solutions. We also seek partners who have the same ethical approach as we have, for instance, data privacy. We also want partners who understand the importance of cybersecurity. editor@newtimesrwanda.com
