In emerging markets, many business owners are often stuck carrying their hard-earned cash, using today’s profits to buy what they need for tomorrow. For many, qualifying for financing is a challenge simply because they lack a credit score. This struggle highlights a significant divide in the digital landscape, where those without internet access face barriers that limit their opportunities for education, financial growth, and economic stability.
To bridge this gap, Mastercard has partnered with KaiOS, a platform committed to enhancing digital and financial inclusion. Together, they’re working to create a more inclusive global economy.
KaiOS has developed an innovative operating system for smart feature phones that allows users to access essential apps without the expense of a smartphone. On the other hand, Mastercard has been striving to integrate more micro, small, and medium-sized businesses into the digital economy, envisioning the future based on the real needs of these businesses. In 2020, the company pledged to boost payment acceptance for these enterprises and successfully reached its goal of connecting 50 million businesses a year ahead of schedule - by 2025.
The recent partnership expands on previous initiatives by offering small businesses in Cote d’Ivoire and Nigeria an affordable digital payment solution gateway, along with a range of additional digital financial tools and resources aimed at enhancing financial literacy.
In a recent conversation with Mastercard Newsroom, Sebastien Codeville, the founder and CEO of KaiOS, shared insights on the obstacles facing small businesses in emerging markets. KaiOS was recognized this fall as a runner-up for the International Telecommunication Union/United Nations award, which honors organizations leveraging digital technology to advance the U.N.’s Sustainable Development Goals. Codeville discussed how this collaboration has the potential to unlock opportunities in the digital economy for countless entrepreneurs worldwide.
Why are billions of people around the world still not connected to the internet?
Codeville: One is the affordability of the device. KaiOS research indicates that a consumer needs around $15 of daily disposable income to afford the cheapest smartphone, yet around half of the world’s population lives on less than $10 per day. Digital literacy is another challenge, People don't always understand the benefits, so they don’t see the value of buying a more expensive device.
Why is it important for small and medium-size businesses to have access to the internet and digital payments?
Codeville: Access to digital payments means access to financial services and financial tools. For example, a business owner transacting only in cash does not have a credit rating, which means they cannot access the financing needed to grow. There’s also the need for efficiency and safety. We see that the presence of high levels of cash goes together with a high degree of security issues.
How is KaiOS working to address these issues?
Codeville: Since 2016, our software platform has provided technology so that our partners can offer low-cost consumer devices to connect to the internet. But it became obvious during COVID that we had to provide more than just internet access. KaiOS is an operating system for what we call “smart feature phones,” which are the traditional keyboard phones but additionally provides access to the internet. With our partners, we've distributed more than 175 million phones that have all the features to make sure that the user gets access to everything, like apps, Wi-Fi, GPS - and now payments acceptance capability - on the devices, as well as being able to use the device as a phone.
What is KaiOS doing with Mastercard regarding digital payment acceptance?
Codeville: We are giving businesses a low-cost way to accept digital payments, plus other digital tools and services from Mastercard and financial service providers. The partnership is specifically focusing on the development of tap-and-go card contactless technology. Because KaiOS is a web-based operating system, additional services can easily be added to the merchant’s app solution. For example, you could add insurance and microfinancing capabilities as well as training modules.
How will having these digital capabilities help small businesses?
Codeville: Take Nigeria as an example. In Lagos, informal drivers transact only in cash, which creates security issues. Now, they will be able to collect digital payments instead, which is easier and safer for them. We also are working with a microfinance institution to digitize their merchants, meaning that the merchant gets a credit history and is able to receive financing to expand their business, increase revenue and develop the local economy.
How did you pick Cote d’Ivoire and Nigeria?
Codeville: We picked them mostly because they are different from each other. Nigeria is a market where a big part of the population is banked. In the Ivory Coast, a very small portion of payments are on cards. We want to make the solution as adaptable as possible to different market configurations. We’re already receiving a lot of interest from additional countries and fintechs. But we want to really focus on the first two markets and be successful there, then we’ll deploy globally.
Are you excited about this new payment acceptance product?
Codeville: It's very exciting, because the KaiOS mission is to help close the digital and financial divide. We believe digitizing payments is addressing a segment which today is not addressed at all. We see a lot of people trying different things, developing apps or developing services, but most of the time these apps and services are developed for smartphones. And the problem is the people we try to help do not have smartphones and cannot afford a smartphone. We believe our low-cost devices are in a sweet spot — and we can really offer something that will change people's lives.
Source: mastercard