MasterCard sets five-year financial inclusion target

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This week, MasterCard set itself a five-year target of connecting 40 million micro and small merchants to its electronic payments network.

To date over two billion people in the world are financial excluded i.e. do not have access to basic financial products like bank accounts and cards, instead having to solely rely on the cash economy.

The company says, “In order for financial inclusion efforts to truly have an impact, there needs to be an equal focus on both access and usage.”

It says that since 2013, it has managed to successfully push more than 200 million people financially mainstream and hopes to reach 500 million people by 2020.

In World Bank’s Findex 2014, Mexico was revealed to have just 39% of people who had an account with a financial institution and around the world cash payments are still a problem.

The Findex says that over 400 million unbanked adults in developing countries still receive government payments in cash, whilst a further 440 million receive cash payments for the sale of agricultural products. The Findex says that moving away from cash towards digital payments, governments can increase the amount of financially included people by 160 million.

MasterCard appears to be tackling the problem of cash from a different angle.  It says that many of its large scale programmes have seen ‘limited success’ during the initial phase, because many micro and small merchants—where most of the underserved shop each day— actually do not accept electronic payments. Where this happens, the company says accounts go unused or only used to withdraw cash.

“Real financial inclusion happens when people can use their new financial accounts to do what many of us take for granted,” said Ajay Banga, president and CEO of MasterCard.  “Helping micro and small merchants connect to electronic payments will accelerate adoption and usage of new financial tools for the unbanked and will have a true impact on people’s daily lives.”

Earlier this month, MasterCard started to work with the IFC, a member of the World Bank Group, to increase the use of electronic payments by micro, small and medium enterprises. The “Financing Facility for Acceptance Development” is designed to address specific challenges faced by banks and these businesses, with a focus on Asia, the Middle East, Africa, Latin America and parts of Europe.

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