Mastercard and IFC, a member of the World Bank Group, announced Thursday (April 26) that they have updated a $250 million global risk-sharing facility in an effort to expand access to electronic payments in emerging markets.
In a press release, Mastercard said that updating the agreement inked in 2015 will help financial companies in developing countries participate in the Mastercard network through an IFC program. IFC will guarantee up to 100 percent of the settlement risk. Mastercard said the new agreement will support a “major” expansion of the program to more participating banks and financial institutions.
According to Mastercard electronic payments help underserved consumers and small businesses participate in the formal economy. Still, many financial institutions in emerging market have difficulty covering the transaction settlement obligations which makes it harder for financial services to scale in a quick manner in emerging markets. “This partnership will help bring modern financial services to underserved people around the world. It allows us to pool our capabilities in risk management and financial technologies, and to leverage our global network of financial institutions to deliver financial inclusion,” said Stephanie Von Friedeburg, IFC Chief Operating Officer.
Mastercard said with the revised agreement it will expand its efforts to identify, develop and implement programs with participating financial institutions, improving access to electronic payments for millions of people in emerging markets. Mastercard said it will also continue to support a separate 2016 agreement with IFC to increase acceptance of electronic payments among small businesses and micro-entrepreneurs in the same markets. “True inclusion is not something any one entity can deliver on its own,” said Michael Froman, Vice Chairman and President of Strategic Growth at Mastercard in the same press release. “It’s partnerships like this, combined with technology and know-how, that are truly driving greater inclusion in emerging markets. The programs the facility is developing around the world are vital to bringing people and communities into the financial system and on a path to prosperity.”
Mastercard said its work with the World Bank Group is helping to increase universal financial access by 2020. Back in 2015, it committed to reaching 500 million people previously excluded from financial services within a five-year time frame. It has connected more than 330 million people around the world through programs like the Mastercard-IFC public-private partnership.