With their cash digitalized, merchants can now connect and trade directly with national and global brands on the platform. We have partnered with hundreds of thousands of local cash deposit outlets and ATMs to enable merchants ‘upload’ their cash to the platform. RedCloud has also solved the problem of low merchant adoption rates by simplifying the logistics of digitalizing cash and providing incentives to drive user adoption and retention. We remove the friction and the risk that is created by handling cash, speeding up the distribution process, and enabling merchants to trade directly with local and global brands. RedCloud is helping close the MSME credit gap by building the world’s first open commerce platform. RedCloud is closing the credit gap with the world’s first open commerce platform To complete the digital transformation of payments in emerging markets, DFS providers must build platforms and products that put merchants first while addressing the financial, operational, and logistical pain points they experience daily. Digital financial service (DFS) providers have discovered that cash works well enough for most businesses in the informal sector hence, adopting digital payments is not an attractive solution for MSMEs. However, despite the huge opportunity that digital payments seem to provide, getting individuals and small businesses to adopt it has not been easy. Most importantly, adopting digital payments provides MSMEs with a data trail that can be assessed to provide credit history and collateralized to access advanced supply chain financing, loans, and other financial products. Statistics show that 90 percent of adults in developing countries already have a mobile phone, and for small business owners in these economies, the mobile phone in the palm of their hands can redefine finance and be used to pay suppliers and distributors, accept customer payments, among many other use cases. FMCGs and large distributors reportedly spend between 2 to 9 percent of their total revenue on managing and processing cash, while retailers and merchants lose 4.7 to 15.3 percent per transaction.ĭigitizing payments is a transformational solution that can be implemented rapidly to reduce the credit gap as mobile phones and digital technologies continue to spread in emerging markets. This over-reliance on cash makes it difficult for financial service providers to gather the information needed to access the creditworthiness of potential borrowers, which further narrows the number of MSMEs that can access finance and credit.Įxcessive cash payments also hurt both large and small companies in emerging markets, as the costs of handling cash become significant at scale. In developing economies, Individuals and businesses of all sizes overwhelmingly use cash, which makes up more than 90 percent of payment transactions by volume. Close the credit gap with digitized payments Lower-income countries can add 10 to 12 percent to their GDP by 2025, while middle-income countries can add up to 5 percent to their GDP by adopting digital financial services. The potential economic impact of digitizing financial services is enormous, though it varies significantly based on a country’s starting position. Therefore, closing the credit gap and empowering MSMEs with access to credit is crucial to increasing GDP and driving economic growth.ĭigital finance can close the credit gap and provide access to financial services for over 1.6 billion people in emerging economies, and provide over $2.7 trillion in new credit for MSMEs by 2025. The informal sector also provides employment to over half of the labor force and is at least 35 percent of GDP. There is a massive gap between the credit micro, small, and medium enterprises (MSME) need and the credit facilities available to them, with studies estimating this credit gap at approximately $5 trillion, or 1.3 times the current lending level.ĭespite this enormous gap, MSMEs remain crucial to emerging economies, as two out of every three full-time jobs in developing economies are provided by SMEs. Transactions are exclusively in cash, and there is no access to credit beyond informal lenders and personal networks. In emerging markets today, over 2 billion people and 200 million businesses lack access to savings and credit, as they are excluded from the formal financial system.
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