Lending to small merchants on their sales data
A proposal for a development finance institution to underwrite small merchants using point-of-sale and payments data, built on the MERIT framework and planned in two phases over 40 weeks.
- Sector
- MSME lending
- Scope
- Proposal, two phases over 40 weeks
- My role
- Proposal lead
The problem
Small merchants take payments digitally every day, yet many still lack the financial statements a lender asks for. Their sales data says more about their ability to repay than their paperwork does.
The approach
Frame the assessment
Use the MERIT framework to structure how merchant data is turned into a credit view.Phase one: data and model
Bring together POS, settlement and payments data with consent, and build scorecards from transaction patterns.Phase two: pilot and scale
Pilot with partner lenders, with repayment collected from future settlements, and refine the model on live results.
Who it serves
Merchants
Working capital based on how the business actually trades.Lenders
A lower-cost way to underwrite small tickets.The DFI
A replicable model for reaching underserved merchants.
The outcome
A detailed proposal with a 40-week, two-phase plan submitted to the institution.