The evolution of Financial Technology companies (FinTechs) is increasingly playing a critical role in salvaging informally operated Small and Medium Enterprises (SMEs), which for long were unable to access credit from banks and Micro Finance Institutions (MFIs).
One such FinTech that has come in handy to serve businesses operating in this grey area is Swipe2Pay, a Ugandan payments solution that empowers SMEs to accept mobile money as well as card payment options.
According to Solomon Kitumba, the founder and head of products at Swipe2Pay, the FinTech offers a mobile point of sale that helps SMEs to sell smarter cashlessly and manage their businesses better.
The firm built a payment layer that allows SMEs accept payment from any mobile money service provider in Uganda, M-Pesa from Kenya and is also said to be in final stages of integrating with Interswitch to enable SMEs accept card payments.
To simplify the process, Kitumba said they built a one-step checkout process, where a client enters their phone mobile money registered number on the business owner’s phone and then enters a PIN code to approve the transaction, instead of the old cumbersome one process of using a USSD code.
“It’s important for us to be in the market; there is more than 16 million underserved SMEs in East Africa, with a USD 1b daily mobile money market. Many of these have never received even a single electronic payment ever; so we have helped people sale electronically for the first time through our platform,” he said.
Shifting SMEs to take on payments from both mobile money and cards, will also help SMEs to be easily credit scored so as to enable them access credit against their sales.
According to Kitumba, one of the biggest challenges SMEs are grappling with is limited access to credit from banks and Micro Finance Institutions (MFIs), mainly due to lack of proper records and their informality. Swipe2Pay helps them streamline business processes, where SMEs are helped to manage sales and expenses, inventory and stock, employees as well as managing multiple locations.
“We work with SMEs because chances are high that they are not being looked at by the banks and MFIs because of their informality, with no books of accounts yet those are some of the things banks look at to make lending decisions.
“The Swipe2pay platform, however, allows SMEs to keep track of their cash flow, and manage stock and inventory, in addition to generating comprehensive business performance data that is used to determine their creditworthiness, building alternative credit scoring models and easing access to finance,” Kitumbasaid during an interaction with HiPipo, during the 40-days-40-FinTechs initiative session.
He added: “The Uganda annual microfinance market is over USD 4billion; still SMEs are not having a piece of this cake. Therefore, we believe that with the right tools and incentives, they should be able to accept cashless payments and also tap into receiving credit from banks and MFIs.”
In one and a half years, the FinTech has signed up over 1,300 SMEs with more than 10,000 transactions, estimated in the excess of USD 281,000, done on its platform.
Additionally, the platform has over 2 million items in stock on the platform, with over 2000 individual item categories.
The HiPipo CEO Innocent Kawooya said collaboration and synergy is important if the world is to achieve full financial inclusion.
“We understand that we cannot be alone in the ecosystem. With over 371 tribes in Africa, you cannot connect everyone alone. That is why we thought it wise to have an initiative like 40-days-40-FinTechs because we believe that by allowing everyone to play their role, we will collectively achieve full financial inclusion,” Kawooya said.
He pledged that HiPipo will over the next four years support FinTechs like Swipe2Pay to ensure every one of those 16 million SMEs that have never received a digital payment, does so.
Additionally, he said that HiPipo would advocate to ensure that the ground is leveled for every player, irrespective of size to compete favorably.
“But as long as you are able to create innovative solutions that speak to the needs of our communities or businesses, then we should be able to have everyone have a platform and be able to provide their service as much as they can.”
The 40-days-40-FinTechs initiative is organised by HiPipo, in partnership with Crosslake Tech, ModusBox and Mojaloop Foundation.
It seeks to enable Financial Technology Companies innovate solutions that facilitate cross-network financial transactions at minimal risks to enhance access to financial services.
Running for 40 days, the project will see the participating 40 FinTechs; acquire interoperable development skills to improve access to financial services, using the Mojaloop open source software.