Mastercard is working with Lipa Later, a Kenyan buy now, pay later (BNPL) firm, to drive up adoption of BNPL in the region, according to Tech Trends Kenya.
One of the main goals of the partnership is reach the underbanked population and individuals with limited access to financial services. Currently, Lipa Later’s underwriting process requires that customers provide six months of M-Pesa statements in order to sign-up for the BNPL service. However, while financial exclusivity has grown in Kenya, that are still many consumers who don’t have access to various financial services, leaving them at a disadvantage.
“Consumers want convenience and payments choice and Lipa Later is bringing those critical components to the market in Kenya,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research.
A View into the Market
In Africa, BNPL companies are helping bridge the gap between consumers who have low purchasing power and limited access to formal credit services by offering affordable credit. While Lipa Later is Kenya-based, it also has a presence in Rwanda, Uganda and Nigeria. South Africa has its own homegrown BNPL company, Payflex, which was acquired by Australian company Zip. And then there’s Carbon Zero in Nigeria and Shahry in Egypt.
The presence of these BNPL companies points to the ongoing efforts being made to sustain the rising interest in consumer credit financing across Africa. For example, with instant Know Your Customer (KYC) capabilities, customers can access financing and enjoy a frictionless shopping experience. Merchants can also increase their average basket size, cater to a wider customer base, and enhance their ability to provide more products and services.
Overall, BNPL has made it easier for many people to enjoy a better standard of living and financial ease because they can purchase essential goods while spreading the payment. The strategic collaboration between Mastercard and Lipa Later not only has implications for BNPL and fintech sectors, but also highlights the growing significance of Africa’s development in the global financial landscape. Financial innovation has been gaining steam in Africa, as digital payments, including crypto adoption, have become more common.
Overall, BNPL can give consumers greater control over their spending. BNPL services offer consumers a flexible way to make purchases without requiring a traditional credit card or upfront payment. By partnering with brands and financial services, BNPL providers give options to those who may have been excluded from traditional credit options.
