Corporate Global Development: Mastercard

Will the corporate world contribute to global development and financial aid? More to the point, where is the incentive for corporations to do so when the ROI is not realizable in the short term? Karen Webster caught up with Carlos Cornejo, SVP of new consumers for Mastercard, to understand exactly how the Mastercard Aid Network is powering NGO humanitarian initiatives all over the world.

Natural disasters, war and humanitarian crises devastate livelihoods in both developing and developed countries. Is there a role for the private sector, with hungry shareholders, to play in global relief in areas where hunger is truly the operative word? Mastercard’s work with NGO partnerships is designed to chip away at the overwhelming needs of those affected by global disasters, war, famine and disease by introducing a very different way to think about digitizing the point of sale.

Mastercard launched its Aid Network in Sept. 2015. Since then, it has made it to number seven on Fortune’s second annual “Change the World” list through company efforts in humanitarian aid. This year, Mastercard Aid Network has also been recognized as “Best Point-of-Sale Innovation” by the PYMNTS Innovators Awards and “Change Agent of the Year” by the Pay Awards.

Karen Webster caught up with Carlos Cornejo, SVP of new consumers for Mastercard, to find out exactly how the company is helping afflicted populations trying to recover from disaster.

The Mastercard Aid Network is a digital voucher system that uses chip-enabled cards to distribute aid. It uses a point system rather than money because the infrastructure and technology required for normal financial transactions are typically lost in the midst of crises as economies stall and financial infrastructures break down — if they were ever functioning at all.

Cornejo first explains that “new consumers,” as his title states, are the 2 billion people globally who, according to the World Bank, are financially excluded — the unbanked. Mastercard is tackling this segment and, by 2020, hopes to change that for 500 million people.

In 2014, according to Cornejo, 165 million were affected by natural disasters, and $125 billion was committed in response by aid organizations; the operational costs involved in disaster response are huge.

“We are working in combination with different entities working toward the same target, like Goldman and NGOs. It is difficult to send all the equipment and tools to affected areas. Also, local economies suffer because the small merchants stop selling. All the goods and merchandise start to come from outside. The impact is huge for them [small merchants].”

Mastercard Aid Network is a system that can breathe life into shattered micro- and macroeconomies.

“Systems such as vouchers don’t work because they have to be collected and processed. Cash as a payment method is a problem in terms of leakage and its management. Our system provides reporting capabilities along with transparency,” said Cornejo.

So, how does a money system work with no money and no connectivity?

Cornejo explains that a card with a chip is loaded with points that can be interchanged among merchants and NGOs for different goods depending on the need in that area. The points represent eligible goods — from food to medicine to shelter. NGOs distribute tablets to merchants, which show pictures of the items available. Beneficiaries select items by tapping the pictures on the screen, their card is read by a reader and the points are deducted from the card and added to the merchant’s tablet. At the end of the week, an NGO agent comes with another tablet and collects the data, which is then taken back to the office and entered into a system to update the merchant’s balance.

According to Cornejo, Mastercard Aid Network is now working with four NGOs, such as Save the Children and World Vision, in Ethiopia, Nepal, Niger and Nigeria, and there have been more than 25,000 cards distributed.

Cornejo concluded: “What we are doing in the payment industry is great, but what we are doing in the humanitarian industry is totally disrupting. The humanitarian work is new for us. To change the world is totally new. To be on that Fortune list is beyond our expectations.”