Mastercard Looking at SMBs to Produce Mobile Payments, Fintech Development

February 4, 2019         By: Steven Anderson

While it’s true that technological innovations can come from anywhere, we tend to look to large corporations for development in financial technology (fintech). Mostly we look here because they have the resources to develop and test such systems, as well as the access to necessary data to run through analytics and refine to find what should be developed anyway. Yet Mastercard is bucking the trend here somewhat, and recently released a report that encourages those looking for new technological development to start looking at small businesses.

Small businesses are “the next battleground for fintech,” according to Mastercard’s “What to Watch For Fintech in 2019” report. More specifically, Mastercard Start Path and CB Insights—who put the study together—expect that the small and medium-sized business (SMB) market will be pushing development mainly because they’re chronically underserved.

Moreover, it won’t be just SMBs making the tools they need themselves; they’ll also be using these tools as a way to break into new markets. Challenger banks in particular, the report notes, will look to offer these tools up to small businesses as a way to distinguish themselves in the field by offering tools not even a larger bank can provide. That may not be the case for long, though, as even Mastercard itself has been seen ramping up its small business services base in recent weeks.

Mastercard even has some basis for this prediction going forward. 2018 made something of a name for itself in the sheer number of investment rounds for fintech featuring payouts of over $100 million. Combine this financial clout with a hungry market and new regulations and the stage is more than set for some major new developments going forward.

The SMB market has long been underserved, mainly because each business by itself isn’t much of a business. It’s a small business, as the name suggests. Only in aggregate are small businesses a powerful market because there are so many of them. Making tools for this market depends on enough businesses being sufficiently interested in buying in enough quantities to make for a decent return. Given how many firms we’ve seen hit nine-figure investment runs, though, we may be gearing up for a much bigger run than anyone expected.

Only time will tell just how this all comes out, but it’s a pretty safe bet we’ll see a lot of new developments. Where they come from, however, is most anyone’s guess.