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How Small Businesses Can Become a Big Driver for Financial Inclusion

While an increasing number of the unbanked across the globe are getting access to more formal financial tools, many are not using them very frequently and are instead continuing to rely on cash. For example, out of the over 400 million mobile money accounts registered globally by the end of 2015, only one-third were active, according to GSMA. This means people miss out on secure ways to send and receive money, to pay for the things they need, and to build up a digital identity.

If electronic payments can serve as an on-ramp to financial inclusion, what needs to be done to enable more usage?

In developing countries, particularly in low-income communities, people buy food and other regular items primarily from local small and microbusinesses (SMBs). If they are able to use electronically held money at more of these stores, it is more likely that they will get out of a cash economy that limits their potential to move up the economic ladder.

In a new report, Mastercard identifies barriers to broader electronic payments acceptance among SMBs – and highlights best practices:

  • Tailoring propositions for SMBs by making it cheaper and simpler for them to accept payments. Masterpass QR, which is already available across many countries in Africa and Asia, removes the need for expensive infrastructure. People simply use their phone to scan a QR code displayed by the store.
  • Enabling new business models, bringing together market participants in new ways. In Kenya, Mastercard is working together with Unilever to digitize the processes of buying supplies and selling goods.
  • Organizing collaboration between public and private sectors around common standards and education. In Peru for example, mobile money program BIM is supported by over 35 financial institutions.

Read more about why acceptance matters, check out a short summary and download the report here.