Report: Pay-on-Demand Will Drive Financial Inclusion

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The Pay-on-Demand solution model will continue to drive digital and financial inclusion across African countries, according to a recent research report released by MasterCard.

The research, which surveyed users in Nigeria, Kenya and Uganda highlighted how Pay-on-Demand model provides new revenue opportunities for micro, small and medium-sized enterprises (MSMEs).

It therefore called on all key players in the financial ecosystem space to come together to scale Pay-on-Demand solutions to enable them unlock opportunities for millions of people across Africa.

The report titled: ‘Pay-on-Demand: The Digital Path to Financial Inclusion,’ explored how digital inclusion has been proven to provide better access to financial and other services.

The report, showed that a focused deployment of solutions like Pay-on-Demand was key to increasing connectivity. It, however said for these solutions to function effectively, it would be critical that all stakeholders such as governments, mobile network operators (MNOs), financial service companies and regulators, come together to unlock opportunities to enable greater financial inclusion.

According to the report, technology and connectivity enabled by MNOs initially made digital inclusion possible. Mobile devices became a viable instrument of digital inclusion when prepaid plans allowed individuals to recharge for as low as the smallest denomination of currency at a time.

Currently, prepaid connections are at 98.8 per cent in Kenya, 97.5 per cent in Nigeria, and 99.1 per cent in Uganda with smartphone penetration in Africa projected to reach 66 per cent by 2025, up from 36 per cent in 2018. Pay on Demand applies the same principle for goods ranging from mobile phones to solar panels, water filters or laundry machines.

The model, often underpinned by the Internet of Things (IoT), further bridges the ownership divide by providing affordable services and assets, driving the next wave of inclusion by keeping people connected.

Executive Vice President, Digital Solutions, MasterCard, Jorn Lambert, said: “The growth of digital technology has presented people in Africa with access to innovative, affordable solutions that help them meet their basic needs, ultimately leading to greater access to capital that can scale businesses and increase prosperity.

“The Pay-on-Demand model is an incredible example of this, which has already empowered millions of people by making solar energy more accessible and affordable.

“But now, with the expansion of Pay-on-Demand to any connected device like smartphones, water filters or white goods, we have a real opportunity to positively impact the lives of a billion people, in the same way the telecoms industry did two decades ago.

“To further scale the model effectively and create a digital economy that works for everyone, key players in the ecosystem must collaborate to drive a new wave of inclusion through connectivity and smart devices.”

By giving customers the flexibility to pay for services via their mobile phones on terms that work for them, MasterCard’s research shows that Pay-on-Demand business models resolve real pain points.”

In all three countries where users were surveyed, access to basic necessities was the number one driver of Pay-on-Demand use, with electricity top of mind for all users.

The main aspirational products acquired through Pay-on-Demand were digital TVs, followed by smartphones, the report added.

Also, MasterCard Senior Vice President, Digital Payments and Labs, in charge of Middle East and Africa, Gaurang Shah, said: “There are 44 million MSMEs in sub-Saharan Africa, 97 per cent of which are micro enterprises. For them, the assets made possible through Pay-on-Demand create improved opportunities through increased connectivity, and new revenue opportunities through being part of a financial system.