New app uplifts informal traders

Informal traders will have the opportunity to both make and receive payments on their mobile phones, thanks to a collaboration between Mastercard and local fintech start-up, Spazapp.

According to Mark Elliott, division president for Mastercard in Southern Africa, “Too many informal micro-retailers are stuck, like their customers, in a cash economy that doesn't work for them.”

How does it work?

Mastercard’s mobile app, Masterpass, allows users to make purchases with their cellphones rather than their bank cards. Spazapp, on the other hand, connects informal traders directly to manufacturers and allows them to track their deliveries.

"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 Elliott. 

Through Spazapp, informal traders will be able to directly order stock and monitor its delivery. Once it arrives, they will be able to pay for it through Masterpass and, in turn, their customers will be able to use Masterpass to purchase the items from them.

“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,” said Tim Strang, CEO of Spazapp.

Access to mobile devices increasing

Gabriel Swanepoel, vice president of Product Development and Innovation at Mastercard, acknowledges that a large number of South Africans are still using feature phones, which don’t support modern apps.

“However, smartphone penetration in South Africa is growing rapidly. More than 29 million people in the country have smartphones, according to World Wide Worx and we expect falling data prices and cheaper smartphone handsets to make the technology ever more accessible over the next two years,” said Swanepoel.

Masterpass will also be zero-rated, which means that consumers won’t have to pay for data to use the app.

Banking details to be kept safe

In light of the recent personal information leaks, Swanepoel assures that each Masterpass transaction uses advanced, multi-layered security to ensure users enjoy the highest protection from fraudsters.

“Masterpass has transformed the mobile device into a PIN entry device, enabling users to enter their bank PIN or secure code to authenticate the payment,” said Swanepoel.   

“This mimics a real world Chip and Pin transaction, offering consumers the same protection they have already come to trust when using a physical payment card,” he explained.