Financial inclusion efforts get $250 million push from MasterCard and IFC

Wed, 2015-04-22 06:00 -- SCC Staff

Council Advisor International Finance Corp. – a member of the World Bank Group – and Council Lead Partner MasterCard have agreed to develop a $250 million risk-sharing facility to enable emerging market banks to provide increased access to secure and transparent financial services to the millions of "unbanked" people in developing countries.

IFC and MasterCard see it as a crucial next step in their ongoing collaboration to increase universal financial access by 2020.

Why it matters
Electronic payments lower the cost and increase the security of transactions, benefiting small businesses and consumers. And while banks in developing countries are eager to expand services to the millions of "unbanked" – they are often held back by collateral requirements necessary to cover settlement risk.

That's where IFC and MasterCard come in. Their risk-sharing facility will provide alternative coverage and share the settlement risk of participating emerging market financial institutions. That's expected to lead to the issuance of millions of new cards, the majority of which will be debit cards for lower income customers. 

Focus on where need is greatest
IFC and MasterCard plan to concentrate on countries where inclusion needs are the greatest or where payment platforms are nascent. This will mean:

  • Increased ability for new financial institutions to join the MasterCard network and for existing ones to grow their payment services offerings and reach a wider segment of customers.
  • Targeting of institutions with limited or no capacity to access a payment platform.
  • Reaching small businesses and individuals who currently transact most of their business or financial activities in cash or have only limited access to electronic payment services.

Time to get it done
Ajay Banga, CEO and president of MasterCard said, "To reach MasterCard’s goal of an additional 500 million people connected to financial services by 2020, we must all roll up our sleeves and get creative in how we build public-private partnerships. This partnership with the IFC is a model for how we can create opportunities and remove barriers for banks to include more people in the financial fold."

More on this topic…
Video: A World Beyond Cash - A World of Financial Inclusion
White paper: A Digital Pathway to Financial Inclusion