Mastercard adds messaging in Nairobi to boost financial inclusion

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Mastercard has launched a digital ordering system that empowers small kiosk owners in Nairobi to order and pay for products from wholesalers via messaging.

Orders through the Kionect system are submitted via a feature phone, helping to establish a digital record for kiosk owners when seeking micro-loans to restock inventory and grow their business. The kiosk owner can pay the wholesaler when restocking from the Kionect messaging through Mpesa mobile payments, a QR code signifying the wholesaler, or a "pay later" mode.

Mastercard says it is testing Kionect with more than 1,000 micro-businesses in three of Nairobi's informal settlements - Kibera, Kawangware and Kariobangi, in partnership with Kaskazi, a for-profit wholesaler and distributor.
Diamond Trust Bank in Kenya, Uganda, Tanzania and Burundi is providing the network for the digital payments between the kiosk owners and the wholesaler, while also acting as a re-seller of the platform to its wholesale business clients.

The Kionect technology provides a digital log of transaction data that qualifies micro-retailers for loans to stock inventory from Musoni, a regional micro-finance provider. The digital record from Kionect indicates how much the kiosk owner has purchased from wholesalers and how much they paid. With every loan that is paid on time, the kiosk owner has the opportunity to take out a larger loan for a longer term.

"Kiosk owners are the heartbeat of their communities, as they source the supplies needed to get by," Michael Elliott, vice president of Mastercard Labs for Financial Inclusion in Nairobi, said in a Wednesday press release. "We have worked hand-in-hand with micro-merchants to truly understand their daily hurdles."

In discovering that product sourcing, tracking inventory and having access to flexible, short-term credit were major pain points, Mastercard set out to develop Kionect, Elliott added.

"This Mastercard technology opens up a new avenue for micro-retailers to grow their business, increase consumer demand and ultimately contribute to economic development in Africa," he said.

Because their businesses operate mostly with cash with little financial record keeping, the nearly 100,000 kiosk owners in Kenya have no way to qualify for traditional loans and lines of credit offered by banks. Plus, the kiosk owners have no mechanism to place stock orders directly with a wholesaler.

Kionect was developed from a direct collaboration with Mastercard Labs for Financial Inclusion and micro-businesses in Kenya. After the initial pilot, Mastercard will embed the most successful services and features of Kionect into solutions designed for scale in partnerships with other global companies in emerging markets.

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Retailers Financial inclusion Digital payments Mastercard Africa