MasterCard and the Inter-American Development Bank (IDB) have signed a keystone agreement, as announced at the World Economic Forum in Davos, Switzerland, to work together in an effort to improve economic inclusion, transparency and financial formalization through the expansion of electronic payments in Latin America and the Caribbean.
The five-year public-private partnership is intended to enhance access to information and promote the transition to electronic payment services in the region, which can help reduce transaction costs and increase the efficiency of financial disbursements. Replacing cash-based systems for electronic ones also can potentially reduce leakages, increasing the likelihood that payments and benefits end up in the hands of intended beneficiaries and recipients, helping to improve the lives of the underserved.
According to Luis Alberto Moreno, President of the IDB, “this initiative takes a two-pronged approach to promote financial transparency and formalization in the region. First, we intend for it to enhance access to information and accountability among governments in Latin America and the Caribbean. Second, in partnership with banks, microfinance organizations, development organizations and the private sector, we plan to extend electronic payment and financial services to the underserved as a vehicle for families and businesses across the region to overcome poverty,” he explains.
“With this new public-private partnership, we intend to demonstrate the impact we can have when sectors come together to formalize local economies and extend the payment ecosystem. By offering financial tools that enable and empower underserved consumers and merchants, we could potentially create greater efficiency, transparency and inclusion for all” says Ajay Banga, MasterCard CEO.
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