Mastercard Flips The Switch On Payments’ Power

25. February 2018.








Most of the world doesn’t think much about flipping on the lights. In fact, one favored metaphor for describing something easy is comparing it to “flipping a switch.”

But for 1.1 billion people worldwide, turning on the lights is anything but “flip a switch” easy, Kiki Del Valle, SVP of Commerce for Every Device for Mastercard, told Karen Webster in a recent conversation on the eve of Mobile World Congress’ kickoff in Spain.

Half of those people live in sub-Saharan Africa, and all endure friction in the course of everyday activities that would likely be unimaginable to people living in first-world countries. Cooking means walking long distances for kerosene. Businesses can only operate for as long as the sun is up, since there is no power to light the insides of those stores. For most, studying also becomes daytime acidity.

It’s not a terribly healthy way to live, Del Valle said, but building the kind of infrastructure necessary to power those areas has proven prohibitively costly – but, as she noted, that is changing. Solar panels are more easily transported and installed, and that technology is “leapfrogging” more standard methods of power transmission. That is great progress, Del Valle said, but it’s not enough as is – because even those units are costly by the standards of these rural dwellers.

“A lot of the population that doesn’t have electricity also doesn’t have a big budget,” she said. “What we need to solve for here is a couple of different things, to really make access possible.”

Solving for Solar With Partnerships

The trick, Del Valle told Webster, is to offer something old, but with a twist in how power is consumed and paid for – metered payments – with a little help from some friends.

Starting in Sub-Saharan Africa.

On one side, she noted, is the provider of the service – in this case, M-KOPA, which provides the consumer with the solar kit that includes the panel itself, a radio, a television (an option) and charging for various devices.

On the other side are the payments providers, which in this case are the telcos and the banks providing the service for Uganda, where the pilot is taking place. Mastercard, with its Masterpass QR system, provides the rails that join the two end points together – and allows the consumer to direct funds.

How that plays out in reality, Del Valle explained, is that the consumer first makes a down payment on the solar kit to M-KOPA. When they wish to purchase power access – say, 10 cents worth for the day – they can do so via a phone, any phone. If using a smartphone, it will be done via an app, or via text message on a feature phone. Either way, the consumer gets a QR code that enables payment.

The consumer, based on how they prefer to manage their money, can then set that payment to come from their bank account – or from their telco’s mobile payment account – and send it. The payment gets to M-KOPA, which has integrated with the Mastercard API, which then leverages IoT technology to switch on the battery and provide electricity to the consumer.

Once the consumer has run through their pre-paid allotment, the battery shuts off and they are free to purchase more as needed.

Solar, Del Valle noted, is just one example – and one they are rolling out in Uganda in the next few months, with plans for wider release soon to follow.

“But this is much bigger, and can work for a lot of utilities, such as water, gas and other basic needs as well,” she noted. “This is very much about giving customers the right tools so they can track usage, manage their budget and control their resource use with better payment options.”

Engaging the Bigger Market

The work the firm is doing in Uganda, Del Valle explained, is one piece of the largest strategy to help bring more customers into the global digital payments transformation – without having to demand a lot more of those consumers.

“The question in every market is where consumers are storing value – which is why it is so important for us to work with mobile operators,” Del Valle said, adding that in many places, they have the trusted relationship with the consumer and can become a platform to enable additional third-party services.

The service Mastercard can provide, she noted, is to serve as the network sitting beneath those emerging networks, which moves money securely between all those new endpoints. From their point of view, Del Valle said, the market is “at a tipping point in its evolution” where mobile operators are moving beyond their core operations to provide a new world of services to consumers.

Taking an even further step back, she pointed out, the entire emerging digital ecosystem – populated by issuers, merchants and device manufacturers – is seeking ways to build out better and more innovative services across channels and devices. And all of those players need a player to integrate the technology behind the scenes.

The Mastercard Engage platform, which will get a more comprehensive introduction at MWC this week, is intended to act as the connective tissue that accelerates time to market for those consumer innovations.

“Today’s digital world unlocks new opportunities for businesses, but they need the right resources to turn their ideas into reality,” Del Valle noted. “By expanding Engage to connect more customers with the right partners, they are able to independently assess those partners and focus on the bigger picture of making a positive impact around the world.”

Those impacts will vary depending on who they are for, and what problem they are focused on solving. The players in need of connection will vary as well – in the developed world, the story may be more about connecting issuers to IoT players, whereas in a developing ecosystem, that issuer role will much more likely be played by a mobile carrier.

But for those who benefit from the services enabled, Del Valle noted, the real difference will be measured in what is possible afterward, as compared to what was possible before.

And that will make it almost as easy as flipping a switch.

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