Mastercard collaborates with M1xchange to roll out digital invoice discounting solution for FPOs and agri-MSMEs via Farm Pass

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, New Delhi: Mastercard today announced its collaboration with M1xchange to offer a digital invoice discounting solution to farmers, farmer producer organizations (FPOs), and agri-MSMEs through Farm Pass, its cutting-edge agritech platform. Along with enabling easy access to credit and working capital, the solution will allow farmers and FPOs to directly connect with buyers, negotiate the best price for their produce, and get paid 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 banks and non-banking financial companies (NBFCs), will bring on board its vast network of agri-businesses and lenders. The solution jointly developed by the two organizations is the first of its kind for the agriculture sector and will help lenders in underwriting credit offerings through the Trade Receivables Discounting System (TReDS).

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 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.”

Till date, through Farm Pass, Mastercard has achieved the milestone of benefitting over 1 million smallholder farmers. The addition of the credit and invoice discounting feature to the platform will support the company’s commitment to digitize the agriculture sector and promote financial inclusion among farmers and rural communities. The collaboration was facilitated with the support of Accion International.