Mastercard has announced their collaboration with South African FinTech startup, Spazapp. The aim of the partnership is to bring mobile payments to spaza shops (informal traders and convenience stores) in South Africa.
The informal retail sector in South Africa is reported to generate R46 billion in annual sales a year with more than nine million households regularly shopping at spaza shops.
“Our goal is to uplift last mile traders and disadvantaged communities by simplifying the buying process for small, informal traders through competitive pricing and collective bargaining power. Masterpass has the scale, efficiency and convenience we need to offer merchants a truly accessible, low-risk and affordable way to accept electronic payments from their customers and pay their suppliers,” said Tim Strang, CEO at Spazapp.
While spaza shops represent the economic backbone of many local communities in South Africa, their true potential remains untapped as they do not have the tools necessary to accept electronic payments and run their businesses effectively.
“Too many informal micro-retailers are stuck, like their customers, in a cash economy that doesn’t work for them. By matching up Spazapp’s extensive supplier and distribution network with digital payment and acceptance solutions from Mastercard, we are able to help these shop owners build a better future and serve their customers who are themselves demanding safer, and more convenient ways to pay,” said Mark Elliott, division president for Mastercard, Southern Africa.
Through this partnership, Mastercard has integrated its digital global payment service Masterpass into Spazapp – a free, money-saving Android application that connects a community of informal traders directly to big FMCG brands including Unilever and Tiger Brands. Using Spazapp, traders can order a wide variety of products at competitive prices – which they would be unable to access without the collective bargaining power that the Spazapp platform offers – and use Masterpass to digitally pay for stock and accept cashless payments from their customers with their mobile phones.
By digitizing the entire value chain, the 4,500 micro-businesses already using Spazapp’s buying app can generate significant savings on stock procurement. Traders no longer need to close their stores to buy stock, miss out on bulk buying savings because of cashflow constraints or have to worry about the security risks and high costs of cash.
For spaza shop owners, Masterpass provides an alternative to traditional Point of Sale devices, allowing them to offer a convenient digital payment option to their customers – the majority of whom are banked and are ready to use mobile payments. This is interesting as recently in 2017 Mastercard announced their partnership with another South African Fintech startup, Yoco, to roll out Yoco's mPOS devices to 15,000 small businesses accross South Africa.Share this via: