South African mobile payments start-up iKhokha and MasterCard today entered a partnership that aims to boost payment card acceptance at micro, small and medium enterprises in informal settlements, while educating consumers and business owners on the benefits of using electronic payments instead of cash.
iKhokha is a Durban-based fintech start-up that supplies SMEs nationwide. The iKhokha device is a low-cost mobile payments solution, helping merchants accept card payments via a device linked to a secure application on a connected smartphone or tablet.
The iKhokha app enables users to complete a number of activities, such as capturing cash, and processing card and mobile payments. Masterpass acceptance is now integrated into the iKhokha mobile application.
In the next six months, iKhokha aims to roll out 700 mobile point-of-sale terminals to cash-based micro-enterprises, including spaza shops, taverns, food outlets, and hair and beauty salons in KwaMashu, north of Durban and in Ladybrand in the eastern Free State. This pilot project will act as a blueprint for direct expansion into other informal settlements nationally.
iKhokha MD Matt Putman says card acceptance can help small business owners formalise their businesses, increase sales and minimise their risks.
"We are focusing on businesses at the main trade and transit points where volumes of people are high and cash-related crime is a serious problem. We explain to entrepreneurs that they can grow their sales with iKhokha and then gain access to unsecured capital for growth needs. If customers would prefer to pay with a card, then it's time to move beyond cash-only acceptance," Putman says.
Recent iKhokha research reveals banked low-income earners generally withdraw their entire monthly income from an ATM, and then carry cash for the month as a result of limited card acceptance in informal settlements.
"While the number of South Africans with access to formal financial products has increased significantly over the last five years, the true potential of electronic payments is going to remain dormant unless payment cards are accepted at the stores and outlets where the newly-banked would normally shop," says Mark Elliott, division president for MasterCard, SA.
"Our association with iKhokha not only extends financial inclusion to merchants and consumers, but educates them on the benefits of using payment cards instead of unsafe and costly cash."
The World Bank states micro entrepreneurs need support in basic accounting, record-keeping and planning to grow sustainably, and that increasing financial inclusion must be done responsibly.
"Consequently, iKhokha allows SMEs to track cash, card and mobile transactions, and provides unsecured cash advance to these business owners based on trading history. Providing SMEs with growth capital, transaction recording capabilities, as well as digital and physical card payment acceptance, in one mobile app, is to our knowledge an African first. We will also be providing financial literacy materials to consumers and merchants at financial wellbeing workshops which will be facilitated by community representatives," Elliot adds.
iKhokha has more than 3 000 merchants. Its mobile payment acceptance platform includes card-present payments and card-linked QR code payments via Masterpass, MasterCard's digital payment service.
iKhokha recently won the MTN Enterprise App of the year award. The company is funded by Capital Eye Investments, a Gauteng-based private equity investor with a key focus on payment technology.
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