What Mastercard’s fintech deals say about payments

Mastercard has announced a batch of Asian fintech companies in its accelerator and partnership programs.

Why these startups? How do they fit into Mastercard’s view of payments in Asia, and how will they advance the company’s own business?

There are two types of relationships with fintechs, says Rama Sridhar, Singapore-based executive vice president.

First, the firm has introduced a new fintech accelerator program called Fintech Express aimed at developing Southeast Asia’s huge under-served populations, to help small businesses accept payments electronically, and support their access to credit. This is about financial inclusion and growing the pie by growing alongside these fintechs.

Secondly, the firm has also added a new batch of fintechs to an existing program, StartPath, to connect them as partners to the firm’s network of banks, merchants and technology companies. This is about identifying companies that can fill in some the gaps in Mastercard’s own capabilities.

“The payments ecosystem is vast and changing, so we partner with fintechs because we can’t do everything by ourselves,” she said.

Themes

The firm has been partnering with fintechs for years but this year’s batch has a common goal of solving for financial inclusion, digital inclusion, and supporting SMEs.

More specifically, this has three product aspects: issuance of payment instruments, acceptance of electronic payments, and remittances.

These partnerships are also designed to help Mastercard extend its own capabilities. In particular, they are helping Mastercard access the underserved in Southeast Asia, promote electronic payments acceptances among merchants, and facilitate credit to people via new models such as installments at the point of sale, a.k.a. buy-now pay-later (BNPL).

Philippines and remittances

For the accelerator program, Mastercard is partnering with Tonik, a virtual bank operating in the Philippines – the first licensed neobank in Southeast Asia. Sridhar says this is an example of a partner that is targeting a market that Mastercard considers a priority for financial inclusion.

“Tonik is agile, it’s driving financial inclusion, it’s all digital – so that’s all in our space,” Sridhar said. “And it may be small, but Tonik has a banking licence, which is huge.”

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Similarly the firm is working with PayMongo, a Stripe-linke payments fintech from the Philippines, that helps local SMEs accept online payments via their APIs.

The other big theme from the accelerator is remittances, which is why Mastercard is working with Rapyd and Nium.

Nium has become a payments infrastructure play having begun as a remittance product called InstaReM. Now it provides fintech-as-a-service payments that supports the growth of other fintech companies. It has become a major regional player and is now eyeing Europe.

“We realized Nium can grow beyond Asia and represent Asian fintechs in Europe,” Sridhar said.

Rapyd is a similar enabler for fintechs needing payment solutions, building the tech to remove back-end complexities of cross-border commerce. “It’s about helping smaller fintechs get to market efficiently,” Sridhar said.

BNPL and card enablement

Mastercard is also working with several fintechs on a more partnership basis, taking advantage of their product capabilities while supporting their growth across the firm’s relationships with banks and other big players in the region.

The new batch of partners includes BNPL specialist Hoolah, and a credit-card enablement fintech, CardUp.

(DigFin wrote about CardUp and its peers arguing they will need to continue to evolve their business models; Sridhar acknowledged differences among local regulations may create the need for such fintechs to earn a spread on their own loans if they can’t make enough from merchant charges. “It’s something we need to contend with,” she said.)

Other partners this year include Bharatpe, a digital bank for SME merchants in India, and Panda Remit, which is a digital remittance company for fund transfers in and out of China.