Mswipe Develops MSME Score for Risk-based Credit Assessment
Partners with Equifax to differentiate risks by assessing alternate data to bureau score.
Mobile point-of-sale merchant acquirer and network provider Mswipe has announced a hybrid credit score that will ease the assessment of creditworthiness for micro, small and medium entrepreneurs.
The system, developed in partnership with Equifax, produces the score as a quintessential layer of credible alternative data on transaction variables, merchants customer profile, loyalty base and other payment-related parameters in addition to traditionally available demographic data and credit bureau rating.
“It provides the opportunity to differentiate risks and thereby open up possibilities of dynamic pricing of credit solutions,” said a statement from Mswips, which provides retailers with the most affordable loan repayment facility through daily settlements on POS loans.
MSMEs, which comprise 95 per cent of businesses in India, often find it hard to secure credit from traditional lenders. Lack of regular banking habits, financial and income statements of MSMEs limit banks and NBFCs in their credit testing ability to provide credit lines or loans as they continue to rely heavily on demographic data or bureau footprint for decision-making process.
“We have created an extremely powerful tool to differentiate risk and not only expedite decision making for banks and NBFCs but also offer risk-based pricing for credit solutions. The credit score enhances Mswipe’s ability to allow our lending partners to extend credit products like loans, credit lines, loans against POS to MSMEs in a quick and affordable manner,” said Amit Mande, Head of Lending Business at Mswipe.
Equifax has strengthened the credit score by back-testing merchants’ credit behaviour in the past and identifying different risk variables, basis transaction history and merchant credit behaviour.
“Equifax brings a unique blend of differentiated data and analytics thereby assisting MSME lenders and Fintechs navigate through crests and troughs of the lending cycle, further promoting responsible lending in these times. Equifax will facilitate lending of business loans to merchants backed by a statistical scoring mechanism using Mswipe POS data and merging it with the bureau performance data,” said Nipa Modi, Country Head for Fintech, Insurance and WFS at Equifax.
The Mswipe credit score will be available for industry partners to offer credit solutions to MSMEs who have been hit badly owing to continued lockdowns amid the second wave of Covid-19 pandemic.