Local Buy Now, Pay Later payment services payment platform Lipa Later will be looking to drive on MasterCard’s move on tokenisation to grow its merchants globally.
MasterCard introduced tokenisation in the Kenyan Market a service that enables virtual card holders to renew their cards without visiting a banking hall effectively locking out banks in the renewal process.
This is the first step among the global payments firm plans to remove first–use, PVC plastics from payment cards on its network by 2028.
Kenyan Financial technology company Lipa Later, now says the move is expected to unlock new opportunities for consumers and merchants by providing alternative BNPL solutions and diversified payment capabilities.
Buoyed by the growth in e-commerce, rising inflation and slower economic growth, buy now pay later (BNPL) schemes have boomed in the country prompting need for new payment channels.
Mastercard Country Manager for East Africa Shehryar Ali says that the partnership is aimed at bridging the gap by providing the underbanked population and individuals with limited access to financial services, the opportunity to participate in the digital economy.
"We unlock new opportunities for consumers and merchants to access digital payments solutions previously unavailable to them,” said Ali.
The two firms will be looking to tap onto the market that has witnessed increased acceptance in the past five years recording year on year growth.
According to the Mapping sales trends to watch in 2023, instalment payment plans, have been growing six fold year-on-year since 2018 and will top sales and marketing trends this year.
Lipa Later now sees the opportunity as the gateway to its planned expansion across the region.
The startup, founded in 2018, is now planning to enter Tanzania, Ghana and Nigeria, and expand in its existing markets, which are Kenya, Uganda and Rwanda.
"Expanding Buy Now Pay Later and lending solutions in Africa through this strategic partnership marks a significant milestone for Lipa Later. We strongly believe in the power of financial inclusion and the transformative impact it can have on individuals and businesses,” said Founder and Chief Executive Officer of Lipa Later Group Eric Muli.
Usually interest free over 30 days for the consumer, BNPL providers make money by charging merchants a fee to access their products.
As such, they are much more affordable for consumers than credit cards that have been associated with exorbitant fees.
Consultancy firm Mckinsey, says that the global buy now pay later market is projected to grow from $22.86 billion (Sh2.8 trillion) in 2022 to $90.51 billion (Sh11.2 trillion) by 2029, exhibiting a Compound Annual Growth Rate of 21.7 per cent.
This according to the two companies will enhance financial inclusion in the country.
According to the 2021 FinAccess Household Survey Report, Kenya has experienced remarkable growth in financial inclusion at a national level, with about 84 percent of the adult population accessing formal financial services.
However, a significant portion of the population still lacks access to formal financial services.
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