Mastercard’s Kionect Extends Microretailers New Options for Shelf Stocking
For anyone who’s ever been involved in retail over the cashier level, it might sound like a familiar story: if things ever start doing well at your shop, you want to expand. But expansion requires stock. If you don’t have the cash on hand—because you just expanded your operation and all—you need a loan. Those aren’t always easy to get, especially for small shops. A new development from Mastercard, however, may help.
The development in question is known as Kionect, a portmanteau of “Kiosk” and “Connect.” Recently released for shops in Nairobi, Mastercard’s Kionect system allows small retailers to place and pay for orders from Kaskazi, a wholesaler partnered with the effort. Kionect users can place the order by text message, and a mobile payment system backed by East Africa’s Diamond Trust Bank allows the order to be paid for and recorded accordingly.
This establishes a digital trail that provides a kind of credit history that can be used to obtain small business loans, great for smaller cash-only shops like the kind often seen in Africa. Those who doubt that the digital history in question would be accepted for loan credentials anywhere, however, will be amazed by the next step. The credit history is specifically accepted by Kenyan microfinance operation Musoni.
This isn’t the only such measure working to establish credit histories for small shops that often operate on a cash-only basis in the developing world. Tanzania has one known as First Access, and it also uses mobile payments systems as a basis to determine credit worth.
It’s an interesting enough notion, to use mobile payments history as a basis for credit. After all, what does that history show? It shows what someone has spent in a certain frame of time. If that spending is sufficiently regular, then it demonstrates that someone has a clear income. You can’t spend—at least, not for long—without income. If someone has a sufficiently stable income that they can spend regularly, then it stands to reason they can repay a loan.
Is the Kionect system the beginning of a great expansion for small retailers? Or is it merely a financial Band-Aid? Only time will tell where this goes, but it’s amazing to see yet another thing mobile payments can do.