Mastercard to PFs on QR Codes: “Do What You Do Best”

Payment facilitators have developed a reputation for innovating solutions that bring previously excluded parties into the formal payments system. According to James Hicks, this ability to take a fresh look at old problems makes PFs well suited to help the card networks expand the use of digital payments into emerging markets using QR codes.

Hicks is executive vice president, Global Acceptance and Solutions, for Mastercard. He noted that the network and other payments system players, including PFs, share a common goal: growing payments acceptance.

For all of these players, the question becomes, “How do we expand this ecosystem that we’re involved in, increasingly grow the pie and add value to all the players within it?” he said.

Last year, Mastercard announced a goal of adding 40 million merchants to its base within five years. Moving beyond a cash-based business opens opportunities for smaller merchants that include better access to capital for growing their business and increased access to customers, Hicks said.

QR codes are one tool that supports that goal, by solving for issues that have prevented digital inclusion for many merchants in the past – including the cost and complexity of traditional POS solutions.

To that end, Mastercard has had QR code solutions in market in parts of Asia and Africa since last year. But continuing to get the solution out into the market requires a ground force of players who understand payments – and who understand the needs of local shop owners as well.

“Particularly as we think about QR in emerging markets, I think payment facilitators are going to be even more critically important,” Hicks said. “What we’re talking about here is continuing to widen distribution into merchants and players who might not have had any exposure or limited exposure into payments generally, and digital specifically. So that local expertise and all the things payment facilitators bring to the table generally are highlighted.”

He told that the introduction of QR codes to small and micro merchants in emerging markets can be just the beginning of their journey into digital payments.

“Our perspective is that this is the first step on the ladder into digital payments,” he said. “Small merchants want to be large merchants. They all want to grow.”

And as they do, Hicks said, they will likely expand to take advantage of other services, such as other mPOS solutions and eventually traditional POS infrastructure.

But before that can happen, these merchants need to be introduced to digital payments in a way that is relevant and useful to them.

“That’s where some of that local expertise and the innovation comes in,” Hicks said, “where payment facilitators can be a bit more nimble and look at different opportunities and say, ‘this is a solution I think can really take off in this particular area of the marketplace by packaging up the payment side and the technology-enabling side’.”

The work doesn’t stop at introducing the solution, however. Because the merchants who are most likely to benefit from QR code solutions are those who have little experience with payments, they are also likely to need robust support – another hallmark of payment facilitators.

“There are so many opportunities, from distribution to innovation to knowledge,” Hicks said. “Payment facilitators can bring a unique perspective into this. We’ve seen that in the market – payment facilitators have been a critical cog in how we see the expansion of merchants into smaller merchants and into different verticals.”

For payment facilitators interested in offering QR code-based solutions in emerging markets, Hicks advises doing the research initially to figure out where they want to operate and how they can offer value.

“I would go back to the role they play today – do what they do best,” he said.