Mastercard collaborates with M1xchange to roll out digital invoice discounting solution for FPOs and agri-MSMEs via Farm Pass
The solution aims to benefit 10 million farmers and agri-MSMEs by addressing their credit access and working capital needs
20th April 2023, Chennai: Mastercard today announced its collaboration with M1xchange to offer a digital invoi ce discounting solution to farmers, farmer producer organizations (FPOs), and agri-MSMEs through Farm Pass, i ts cutting-edge agritech platform. Along with enabling easy access to credit and working capital, the solution wi ll allow farmers and FPOs to directly connect with buyers, negotiate the best price for their produce, and get pa id faster. Farm Pass is part of Mastercard’s broader Community Pass platform.
As part of the collaboration, M1xchange, an RBI-approved facilitator for discounting and sale of receivables to b anks and non-banking financial companies (NBFCs), will bring on board its vast network of agri-businesses and l enders. The solution jointly developed by the two organizations is the first of its kind for the agriculture sector a nd will help lenders in underwriting credit offerings through the Trade Receivables Discounting System (TReD S).
- Sundeep Mohindru, CEO, M1xchange, said, “The large network of financiers on M1xchange TReDS will enhance liquidity flow for buyers and sellers on the Farm Pass platform. TReDS offers a unique proposition that discounts invoices raised by FPOs for their end customers based on their credit profile. This makes FPO business scalable as their dependence on credit for working capital financing is removed through invoice discounting. All FPOs registered on Farm Pass will get instant access to a network of more than 55 banks and NBFCs via M1xchange.”
- Owing to the delays and follow-ups involved in directly engaging with buyers, famers and agri- MSMEs often sell their products to middlemen to avail instant payments. The FPOs also struggle with access to working capital, which prevents them from procuring effectively from farmers. By enabling credit via invoice discounting, the Mastercard-M1xchange solution will equip these FPOs with working capital to purchase goods from farmers and sell them to buyers at the best price with instant payment. This will help start a self-sustaining cycle for the FPOs, resulting in self-sufficiency over the medium to long term.
Vikas Varma, COO, South Asia, Mastercard, said, “To support the Government of India’s efforts at doubling farm ers’ income, access to formal credit will act as a catalyst. In collaboration with M1xchange, Mastercard aims to b ring together MSMEs, FPOs, traders, and farmers on a single platform to address their working capital and credit needs through an invoice discounting solution, leveraging the secure and consented data on the Farm Pass platf orm. Through an auction-based mechanism for selecting the best interest rates against the trade, the solution ai ms to benefit 10 million farmers.”
Till date, through Farm Pass, Mastercard has achieved the milestone of benefitting over 1 million smallholder fa rmers. The addition of the credit and invoice discounting feature to the platform will support the company’s com mitment to digitize the agriculture sector and promote financial inclusion among farmers and rural communi tie s. The collaboration was facilitated with the support of Accion International.
About Mastercard (NYSE: MA) www.mastercard.com
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an in clusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and acc essible. Using secure data and networks, partnerships and passion, our innovations and solutions help individ ua ls, financial institutions, governments and businesses realize their greatest potential. With connections across m ore than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.
About Community Pass
Community Pass, from Mastercard, offers an interoperable digital platform that facilitates transactions – from making micro payments at the merchant to tracking vaccines delivered by a healthcare clinic. By shifting manual and paper-based processes into digital transactions, the platform reduces the potential for errors, fraud and cost to serve, while improving data and visibility for service providers to properly inform resource allocation and pro grammatic decision-making – ultimately this increases access and unlocks the delivery of services. Community Pass enables this through proprietary products as well as integration with third-party technology solutions, all in a safe, secure and privacy-enhancing environment.
About M1xchange
M1xchange TReDS is a digital marketplace organized under the approval of Reserve Bank of India to sell the rec eivables to banks/NBFC to facilitate the discounting of invoices and bills of exchange on a PAN India basis. M1x change commands 35% of TReDS market share in India.
To know more, please visit: www.m1xchange.com
