Connected commerce promises to iron out many of the inconveniences of modern life by making everyday payments fast, seamless and predictive. But in the developing world, connecting payments to the Internet of Things could have a more immediate and transformative effect on people’s lives.
In Uganda, Mastercard is working on a project leveraging digital payments technology and the IoT to serve villagers with no access to electricity. Mastercard will enable them to obtain power through solar-energy panels under a pay-as-you go model.
“We talk a lot about how connected commerce will change lives with self-driving cars and other appliances, but in Uganda we’re extending the functionality of this technology in a way that’s solving the critical problem of energy access and improving the basic well-being of citizens,” said Kiki Del Valle, Mastercard’s senior vice president of Commerce for Every Device.
Mastercard unveiled the Ugandan program Monday in Barcelona at Mobile World Congress, where it announced that 150 vendors have joined its directory of
Mastercard’s Pay-Go service in Uganda is built on a partnership with M-Kopa, which sells home solar systems to consumers in rural parts of Africa with no electric power. These consumers typically walk miles to purchase kerosene to provide lighting in their homes.
Through an integration with local mobile network operators, Mastercard is piloting a service for consumers to purchase solar-power credits as needed using the same funds that pay for their data-services, with the ability to track their solar usage, according to Del Valle.
“We’ve started with electricity through solar power, but this approach could work for distributing any type of utility commodity including gas or water, giving consumers the ability to track and meter their usage,” she said.
Mastercard built the system by creating an API that links M-Kopa’s solar-power services to the local mobile telephone network operator, according to Del Valle. Users scan a QR code attached to the solar panel that recognizes the merchant—in this case M-Kopa—and choose the amount of solar credits they want to purchase. Mastercard routes that transaction to M-Kopa, with each transaction tied to the specific device by a QR code.
“Mastercard sends an alert to the merchant once the payment is made, and because each device has its own ID, the merchant and the user can easily track purchases and usage through the app,” Del Valle said.
Mastercard aims to roll out the service in rural areas of Uganda later this year. It selected Uganda because of the country’s weak penetration of electricity.
“Uganda has one of Africa’s lowest rates of electrification—down to about 7% to 8% of the population in the most rural areas,” she said, adding that Uganda’s government has set a goal of expanding electricity to 26% of the country’s population by 2022 to improve health, safety and education.
The project will likely expand as methods of selling electricity in Uganda multiply, Del Valle said.
“We’re starting with renewable solar energy, but there are many ways to spread access to electricity, including via minigrids and centralized grids," she said. "[We] see this as a long-term opportunity in this part of Africa."
As the program evolves, Del Valle said Mastercard sees possibilities for solar-panel users in Uganda to resell electricity to their neighbors, and even for users to receive credits from third parties through push-payment services.
“We’re very interested in the long-term possibilities for how payments-enabled devices could expand connected commerce through social networks in many of these developing markets,” Del Valle said.
Payments-enabled IoT technology will introduce new products and systems in emerging economies, whereas in mature markets IoT technology will mostly replace existing services, said Thad Peterson, a senior analyst with Aite Group.
"In the developing world, IoT and payments are very relevant when an established infrastructure isn't readily available," Peterson said.
