PURCHASE, N.Y.—With the ever-expanding Internet of Things and the growing adoption of mobile money, pay-as-you-go programs are making it easier for people in developing countries to access goods and services by providing them a more flexible way to pay for them, according to a new report that also highlights how pay-as-you-go is being tested in one country.
Instead of a one-time charge to buy tools such as a gas stove, people can install the purchased item at home and purchase credits to use it over a period of time until it is paid off, Mastercard said. The hardware is connected to the Internet, enabling the provider to prevent the device from producing gas if credits are depleted.”
“Pay-as-you-go can increase access to basic necessities for those in remote areas who are not served by traditional infrastructure and lack financial resources. Solar is a strong example of an industry that has seen a huge boost as a result of pay-as-you-go and is currently electrifying rural Africa,” Mastercard said.
Mastercard and M-KOPA are launching a pay-as-you-go pilot to give Ugandans access to expensive solar equipment that can light up their homes and businesses. Rather than paying a hefty cost upfront, users can make a small deposit and take the panels home with an agreement to pay them off over a year.
How It Works
In this case, Mastercard’s Pay-Go application programming interface (API) connects with the M-KOPA hardware that controls its ability to produce light. M-KOPA customers top up their solar accounts with credits by scanning a Quick Response (QR) code and use the device as needed, Mastercard said.
The company said that the pay-as-you-go model can open up access in lot of other areas in addition to solar:
- Water – Providing clean water directly into homes instead of unsafe, communal system
- Telecommunications – Bringing Internet and mobile networks to remote areas
- Agriculture – Enabling smallholder farmers to buy farming equipment needed for a sustainable livelihood
- Gas Stoves – Replacing the use of unhealthy fuels like charcoal and kerosene with access to modern equipment powered by cleaner alternatives
‘A New Patch to Financial Inclusion’
“Additionally, pay-as-you-go also opens up access to financial services and tools, often for the first time. By keeping accurate records of payments that a user is making, the user generates verifiable digital identity and trackable credit history which was previously impossible to create or maintain. This data gives companies and financial service providers the ability to put underserved populations on a new path to financial inclusion,” Mastercard explained.