Mastercard and &frnds collaborate with Microsoft to equip 10,000 Filipino small businesses with AI-powered solution

&frnds’ solution leverages artificial intelligence (AI) to help small businesses in the FMCG sector gain access to digital financial services, connect with market offers, and make AI-informed business decisions to enhance their sales efficiency.

Today, the Mastercard Center for Inclusive Growth (the Center) and &frnds announced a new collaboration with Microsoft to equip 10,000 small businesses in the Philippines with an AI-driven solution to unlock their access to finance, improve their operational efficiency, and boost their sales and competitiveness. This collaboration is part of the global Mastercard Strive program and aims to promote small businesses’ adoption of digital tools in their business operations.

Data from the Department of Trade and Industry (DTI) showed that micro and small businesses make up 99% of businesses in the Philippines and contribute to around 65% of the country’s total employment.¹ Approximately 66% of these businesses are women-owned according to the Asian Development Bank, yet they continue to face barriers in accessing financial and digital resources compared to their male counterparts.²

While generative AI is transforming industries worldwide, small businesses in emerging markets have been largely left behind. Even with the widespread availability of smartphones, many small businesses have yet to integrate digital tools into their daily operations.

“The tech industry needs to ensure that the benefits of AI extend to small businesses everywhere, given its potential to drive efficiencies and create resilience,” said Subhashini Chandran, Senior Vice President, Social Impact, at the Mastercard Center for Inclusive Growth. “This collaboration expands Mastercard’s commitment to supporting micro and small businesses, the backbone of the Philippine economy, and equipping these business owners – especially women entrepreneurs –  for modern-day business by making AI accessible, affordable, and scalable.”

&frnds has developed a digital B2B platform that enables large enterprises to digitalize their sales while equipping micro and small retailers with AI technology. It provides access to targeted offers and loyalty programs, a wider range of FMCG goods, embedded financial services, and bespoke business analytics—all through a simple, chat-based interface.

Leveraging data insights from 150,000 retailers and relationships with Microsoft and the Center, this solution by &frnds addresses the specific needs of underserved small retailers in the region. Initially launched in the Philippines, where over 1 million small retailers serve 115 million people, this platform is set to scale across emerging markets.

“If we do not invest in building the infrastructure and developing the use-cases for AI’s application to the 500 million micro and small businesses in emerging markets, the majority of which are led by women, we risk furthering both the gender gap and digital divide. We are working to address this need and make the benefits of AI accessible to all. Together with our unique business model and technology, we are able to help these entrepreneurs grow their business” said Dorron Mottes, Chairman & Founder, &frnds.

The program takes a human-centered design approach while benefiting from the latest advancements in AI technology. Through a collaboration with Microsoft and using Microsoft Azure OpenAI Service and Microsoft Copilot Studio, it enhances AI-powered text-based digital ordering for small businesses while providing high-touch support to drive adoption. Local youth with established relationships with small retailers will guide them in adopting and maximizing the benefits of the &frnds solution. Copilot Studio is a generative AI agent platform developed by Microsoft to increase enterprise productivity through building your own secure AI-powered assistant.

“We see huge value to the project which is not only enabling these traditional stores to benefit from the latest AI-technology, but also enables our enterprise clients to use the embedded Copilot to gain direct access and data insights to better serve these millions of small retailers,” said Peter Maquera, CEO, Microsoft Philippines.

Mastercard Strive, supported by the Mastercard Center for Inclusive Growth, helps small businesses to go digital, get capital, and access networks and know-how. With programs in countries around the world, Mastercard Strive aims to reach 18 million micro and small businesses and empower them to thrive in the digital economy. The Mastercard Strive program in the Philippines is delivered by Caribou.

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Background: Small businesses in the Philippines

The Philippines is home to around 995,000 micro, small, and medium enterprises (MSMEs)¹, representing 99.5% of all businesses in the country², 91% of whom are micro enterprises³. These MSMEs contribute 63% of jobs and 36% of GDP⁴, making their growth essential for the country’s economic recovery, particularly through digital transformation. 

However, MSMEs in the Philippines are largely underfinanced⁵, as many lack physical banking services, and digital financial services (DFS) provide a more accessible alternative⁶. The government has prioritized digital finance, with new banking regulations and a growing fintech presence, though existing solutions are limited mostly to payments. While they are driving the country’s digitalization efforts, only 6% of MSMEs in the Philippines have advanced digital tools, and 23% still lack any digital tools⁷. Government initiatives, such as the Department of Trade and Industry's digital transformation checklist, alongside other external programs, are helping to bridge this gap⁸.