Tracking Merchant Transactions Will Provide New Credit Lines For African Entrepreneurs
Merchants play an important role in the sub-Saharan African economy. They are part of the informal sector that makes up nearly 86% of all employment in the region. Part of their daily requirement involves managing inventory and purchasing adequate amounts of products from suppliers to serve their customers. Attaining a balance in their inventory is critical, without a properly stocked store, sales and loyalty are lost — customers are fickle and will head to nearby shops if they cannot find the products they want. On the other side of this marketplace lie the suppliers who provide the inventory based on the orders from the merchants. Depending on the volume, this relationship enables the suppliers to build a record of transactions that can be used to assess the creditworthiness of the merchant and offer them flexible credit solutions. By offering credit to the merchants, suppliers can not only increase retention and loyalty but also gain market share against competition. Moreover, credit solutions also enable the suppliers to offer a variety of products and incentives to the merchants, which can increase the consistency and volumes of purchases. To build robust credit solutions, the supplier needs to leverage the merchant’s digital footprint alongside their transactional records in order to properly access the merchant’s creditworthiness.
In sub-Saharan African, the supplier traditionally offers credit solutions solely on existing transactional records. This process of evaluating the merchant’s creditworthiness is insufficient because it fails to factor in alternative data from the merchant’s digital records. A recent study by Ernst and Young highlighted that by leveraging alternative data, lenders can increase loan approval rates by 48% and reduce risk by 39%. For the suppliers, this additional data creates a unique opportunity to increase the number of creditworthy loans issued but also to incorporate more merchants as regular customers into their business.
To support suppliers in building holistic credit profiles of merchants, Pngme has developed a unified financial data API that incorporates the supplier’s transactional records with their merchant, along with the merchant’s digital footprint across all other financial accounts they hold with other financial institutions. By combining these multiple data sources, Pngme will be able to increase the number of creditworthy merchant’s by 3x and support suppliers to scale their business.
We are currently working with leading suppliers in sub-Saharan African to increase the value of their merchant network. If you would like to speak further on how Pngme can help increase your market share while reducing risk through a financial data API, please contact us via this link.
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