IFC and MasterCard sign financial inclusion MoU
IFC, a member of the World Bank Group, and MasterCard have agreed to work together to broaden the use of electronic payments by micro, small and medium enterprises, with the goal of connecting five million such businesses to the global payments network over five years.
3
External
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
A memorandum of understanding signed Wednesday is part of the institutions’ drive to achieve universal financial access by 2020.
Universal financial access cannot be achieved by simply providing individuals a transaction account. Micro, small and medium Small Businessbusinesses—with whom most of the unbanked transact on a day to day basis—must be able to accept electronic payments. This is an area where banks in developing economies can innovate and expand services.
The “Financing Facility for Acceptance Development” is designed to address these challenges, with a focus on Asia, the Middle East, Africa, Latin America and parts of Europe. Together, IFC and MasterCard will work to:
Develop and deploy strategies to help banks and payment facilitators reduce the cost of onboarding and/or maintaining the network of micro, small and medium enterprises (MSMEs);
Strengthen the ability of banks to take on additional acceptance activity related to merchants;
Strengthen working capital facilities (including cash advances, business credit cards, overdrafts, loans) for merchants; and
Explore the establishment of new players focused on onboarding and servicing smaller merchants for acceptance programs.
“Achieving universal financial access by 2020 is a development imperative and a priority for the World Bank Group,” said IFC Executive Vice President and CEO Philippe Le Houérou. “By encouraging greater use of electronic payment transactions, this partnership will help expand financing to MSMEs—a major force for job creation in developing countries.”
Ajay Banga, president and CEO of MasterCard said, “To help connect an additional 500 million people to financial services by 2020, we can’t focus on access alone. A true solution provides the means to use these new accounts and do more of what many of us take for granted. This empowerment of both consumers and merchants is a meaningful and impactful change we can make today.”
This program builds on a 2015 partnership between IFC and MasterCard to establish a Risk Sharing Facility that provides alternative coverage and shares the settlement risk of participating financial institutions in emerging markets. These institutions play a big role in issuing transaction accounts to the unbanked.