MasterCard has partnered with a local South African telecom to equip 22,000 merchants and rural shops – many operated out of homes – with point of sale devices, allowing them to accept card payments for the first time, according to a report in AllAfrica.

Servicing millions of customers in rural areas and under-served settlements, these merchants have historically operated on a cash-only basis, the report said.

Blue Label Telecoms provides thousands of point of sale terminals in South Africa, used mainly to sell prepaid vouchers such as airtime and electricity.

“Over and above the estimated 100,000 spaza shops (small-scale, home-based grocery stores) spread across South Africa, there are tens of thousands of small- and medium-sized retailers and service providers,” said Mark Levy, Blue Label joint CEO.

These merchants will experience “financial inclusion” and the safety, security, and convenience of electronic payments in communities where consumers have largely been unable to use formal payment products, Levy said.

The number of South Africans with access to formal banking products has increased significantly in the last year, but not in rural areas, said MasterCard South Africa President Philip Panaino.

Blue Label hopes to roll out 15,000 new MasterCard card acceptance locations in South Africa’s townships and informal settlements. These will allow merchants to accept chip,  PIN and contactless payment cards for goods and services, as well as sell Blue Label’s prepaid vouchers using a single device.

Blue Label also plans to upgrade 7,000 existing terminals used in smaller spaza stores using MasterCard Mobile software. This will allow MasterCard holders to use PIN-based debit, check or credit cards issued by Standard Bank, Absa, Nedbank and the South African Social Security Agency, along with their mobile phones, to pay for purchases at selected merchants.

“This innovation is a cost-effective payment mechanism that doesn’t require customers to open another bank account,” Panaino said.