The American Chamber of Commerce (AMCHAM) Business Summit was held on Wednesday, 24 April, in Mauritius. At this exciting event powered by Mastercard and Bank One, the first panel dealt with the future of digital payments and innovation. It explored cutting-edge advancements and innovative strategies shaping the future of payments.
The panel was chaired by Bhavya Shah, Head of Personal Financial Services, Bank One and featured stellar speakers such as Kelvin Heeroo, Head of Product & Innovation, ICPS; Shomika Luchmun, Country Director, Mastercard; and Sebastien Leblanc, Chief Growth Officer, MIPS.
Digital stars: Virtual cards and Tokenisation
Bhavya Shah began by asking Kelvin to share his insights on how the global payment system is evolving and provide his thoughts on the most promising new digital payment innovations on the horizon that merchants would like to offer their customers.
Kelvin stated: “The payment industry has grown through the advent of the different APIs that have become available via the Open Banking Initiative that was concretised five to six years ago. And since then, we have seen great executions of the idea. This has happened in a lot of countries, like in the USA – and it’s making its way now into the African continent and into Mauritius. So, when we see the demand that our clients have from us today, we get a lot of requests, for example, for virtual cards. If you look at Gen Z and you look at the statistics that are available in the US, in Europe, and so on, there has been a growth of 10% every year from 2020 to 2023. This massive adoption of digital forms of payment by the new generation is what we are seeing here, translated as an increased demand for virtual cards.”
He went on to note that tokenisation, by transacting in a digital medium, through phones, wearables, and e-commerce, was the next big thing. Kelvin concluded that the holy trio of digitalisation, open banking, and tokenisation would work together to create a much more efficient and connected ecosystem beneficial to the financial institutions, to the merchants, and, not least of all, to their customers.
Three things to rule them all: AI, Biometric, and Blockchain
Bhavya next asked Shomika to shed light on how Mastercard is actually leveraging these new payment capabilities to make the lives of their users easier and to help businesses grow.
Shomika noted that Mastercard’s efforts in the Indian Ocean islands, particularly Mauritius, reflects their journey into the future of digital payments and transactions.
“One, I agree with Kevin that the virtual card, or your mobile phone as wallet, is the way forward. The second part of it is when we think about Mauritius, for instance, we have a huge bank population in terms of individuals, and we have a fantastic rate of smartphone penetration. So there’s no reason why we can’t leverage on these technologies with this environment to make it happen, just like in Europe and all these sophisticated markets, where your card is actually on your phone. You open your phone, you tap, and it’s done.”
He noted that the pandemic had triggered many changes in consumer behaviour and in terms of what they were doing in the region, and in Mauritius, a shining example was the launch of Simplify, an initiative undertaken by Mastercard together with the largest bank.
“What does Simplify mean? It’s a platform that enables small businesses to become digitalised. And I think ICPS knows this very well because they are pretty much the backbone of the Simplify system. Two, with Bank One, we come up with a different proposition where we cater for the mass-affluent market with premium services. So what I’m doing here is giving you examples of where Mastercard and our strategic partnership are actually catering for the different needs of the market. And finally, just recently, we’ve activated our payment gateway for enabling merchants to access cards much more seamlessly online.”
He turned to Sebastien and lauded him for starting MIPS, thus creating a quasi-marketplace enabling contactless payments everywhere, online – exactly what was required during the pandemic. Looking ahead, he noted that three key words will be: one, artificial intelligence, two, blockchain, and three, biometric.
“I feel a lot of governments/ policy makers are working in the right direction to create a safe and convenient environment with convenience being at the forefront of technological innovation. First, Mastercard will continue to invest in our strategic partnerships because that’s where we make a big impact in the market. I keep thinking and believing that a strategy partner understands the local market better than we do, as a global phenomenon. The second part is, from a Mastercard perspective, investing in not only the technology side of it, but the digital journey itself, making the customer experience become seamless. I think that’s the end objective that we need to work towards.”
Digital Darwinism: SMEs must go the digital payments route
Finally, Bhavya turned to Sebastien for a few concrete examples of how SMEs can leverage the opportunity to grow and help the community.
Sebastien emphasised that SMEs have truly no choice in the matter, and harked to Digital Darwinism as a phenomenon that explains why there is no choice for SMEs but to go digital.
“We are talking about digital payments here. And being on the field, especially with SMEs, I can say they have already made their choice, in fact. Just a quick figure – there are around 100,000 or 150,000 SMEs in Mauritius. Do you know how many of them are actually equipped to take a digital payment? 20,000 only!,” he exclaimed.
He soberingly remarked that FinTechs often look at SMEs and complain that they do not wish to go digital because of entrenched comfort in dealing with cash, reluctance to be tax efficient, or simply, absence of digital literacy. Part of it was true, he reasoned, but a majority is an old, legacy financial institutions pretext to hide their failure to equip those merchants efficiently.
“I will take an example. At MIPS, we have a campaign called Operation #KassDanTa #NaPatassArkass. Our goal is to onboard 2,000 merchants in 6 months. And you know what? They are willing to come on board because we offer affordable and convenient solutions for these merchants.”
Sebastien went on to offer truly Mauritian examples that for him, meant the right impact was being achieved. “We onboarded 4 taxi drivers and 4 dholl puri vendors. And now, the merchants are operating with credit cards. They understood the competitive advantage to address the market – to be cash-lite. I think that SMEs want to do big business to be efficient. And if the POS determines their competitive advantage for them, they just go for it.”
Bhavya concluded the formal panel by referencing the UPI payment system in India that was launched about 9 years ago and now accounts for as much as 17-18% of individual payments across the country. “When the UPI payment system was launched, everybody complained about how a little vendor in a tiny little village could ever be expected to use something like that! But guess what? Everyone was proven wrong. Now, in fact, a lot of vendors don’t accept cash at all because of the convenience of digital payments. The government and the policy makers created an infrastructure that was robust, scalable and free. And then once that was in place, we had FinTechs being able to offer great pricing and easy offerings to go with it.”
Increasing adoption by reinforcing trust in digital payments
Bhavya asked each of the speakers how Mauritius could counter the reluctance to adopt digital payments due to fear of security, in a world of increasing cybercrime and complex AI.
Kelvin noted that AI’s positive side lies in myriad applications today in terms of fraud detection and prevention, better KYC, and better credit scoring, and so on and so forth. “AI can be a very great protective force against fraud,” he averred.
Bhavya next turned to Shomika and asked him how he would explain AI and fraud protection to a dhall puri wala, for instance. Shomika explained that this is precisely where strategic alliances and brand reputation make a big difference. He also commended partners like Bank One for educating the market, and those like MIPS who understand that SMEs are not technologically savvy, but take pains to explain to merchant how to use new tools and reassure them that it can be done. “Trust in the brand, trust in the technology is super important. That’s where we all collectively make the difference in the market,” he concluded.
Bhavya finally turned to Sebastien who noted that the adoption of digital payments was imminent and that in 3-4 years, there would be a big bang of digital transactions such that consumers would pay with their identity. “I see people using mobile phones but one day it will just be biometrics,” he emphasised.
Bhavya wrapped up by noting that AI, blockchain and biometrics are key drivers of the future. “But, ultimately, what matters for the SME we are trying to serve is: Do they have a simple onboarding journey and cheap solution they can trust? And if all that happens, we can truly put Mauritius on track to become a cashless society.”
