Mastercard partners with M1xchange for digital invoice discounting solution for FPOs, MSMEs

NEW DELHI: Mastercard on Thursday announced its collaboration with M1xchange to offer a digital invoice discounting solution to farmers, farmer producer organisations (FPOs), and agri-MSMEs through Farm Pass, its agritech platform. Along with enabling access to credit and working capital, the solution will allow farmers and FPOs to directly connect with buyers and negotiate prices for their produce. 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 banks and non-banking financial companies (NBFCs), will bring on board its network of agri-businesses and lenders.

Sundeep Mohindru, CEO, M1xchange, said in a statement, “The 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 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 aims to 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 in a statement, “To support the Government of India’s efforts at doubling farmers’ income, access to formal credit will act as a catalyst. In collaboration with M1xchange, Mastercard aims to bring 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 platform. Through an auction-based mechanism for selecting the best interest rates against the trade, the solution aims to benefit 10 million farmers.”

The collaboration was facilitated with the support of Accion International.