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MasterCard to open Sh1bn Africa research lab in Nairobi next year

MasterCard president and CEO Ajay Banga. The firm has set aside Sh722 million to fund tech start-ups over the next three years. PHOTO | DIANA NGILA
MasterCard president and CEO Ajay Banga. The firm has set aside Sh722 million to fund tech start-ups over the next three years. PHOTO | DIANA NGILA 

MasterCard is set to open its first ever African research laboratory in Nairobi next year, raising Kenya’s status as a financial technology hub on the continent.

The facility, to cost about Sh1 billion ($11 million), will be equipped to develop and deploy new payments systems such as mobile money apps and cashless payments that will make transactions faster and easier for consumers.

The New York-based firm said it selected Nairobi as the home of the pioneer MasterCard Lab in Africa due to Kenya’s global repute for piloting mobile money platforms and development of e-commerce and payment innovations such as M-Pesa.

“Kenya represents some of the most successful countries in terms of implementation and reach of digital financial services.  Therefore, the building blocks necessary for financial service innovation are present,” MasterCard said in a statement.

“Our expectation is that the lab will be operational in early 2015.”

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The Nairobi-based research and innovation facility will become the eighth MasterCard Lab in the world after those in Silicon Valley, St Louis, Miami, New York, Dublin, Singapore and Sydney.

The new lab adds to Kenya’s claim for top position as Africa’s technology hub; given that Nairobi already plays host to other big names such as IBM Africa Lab, iHub, Columbia Global Centre, Nokia Research Centre, Samsung Engineering Academy and the World Bank-funded Climate Innovation Centre.

The labs will work as open spaces where techies and app developers will develop tools to deepen financial inclusion across Africa.

MasterCard has set aside Sh722 million ($8 million) over the next three years to fund tech start-ups, financial and academic institutions and governments to develop practical and cost-effective financial e-commerce tools.

The centres will also act as innovation hubs to match IT innovators with investors who will help develop their ideas into commercial enterprises.

“The lab will generate financial inclusion solutions and fast-track the best ideas from concept through prototype, pilot and into commercialisation faster than ever before,” said Ajay Banga, president and CEO of MasterCard.

Kenya has gained global standing with the innovation of mobile money service M-Pesa and the mass adoption of mobile cash transactions which topped Sh1.52 trillion in the eight months to August this year – which is equivalent to a third of the newly rebased GDP.

Kenya has a total of 15,963 point of sale (POS) machines and about 1.3 million plastic cards in circulation including ATM cards, prepaid, debit and credit cards, data from CBK shows.

Payments using cards topped Sh836.9 billion in the first eight months of this year – which is lower that mobile payments - highlighting Kenyans’ preference for disruptive innovations such as M-Pesa.

MasterCard Labs have been credited for many innovations including contactless payment dubbed ‘tap-and-go,’ mobile money solutions such as MoneySend.

The firm will use the labs to take on rival Visa and in the battle for the control of Kenya’s lucrative payments processing market.

MasterCard has signed up Kenya’s two largest lenders Equity Bank and KCB to issue new generation debit and credit cards under its brand.

It has also signed up Kenya’s biggest retailer by revenue to issue the Nakumatt Global Prepaid MasterCard.

The firm is also angling for a piece of the matatu sector with commuter cards such as KCB Pepea, Abiria Card and Modern Coast Card.

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