What is a common need among a gig worker seeking a second stream of income, an SMB looking to grow their business in an urban neighborhood, and a city planner hoping to solve the complexities of urban traffic congestion? Craig Vosburg, Mastercard’s president of North American markets, told Karen Webster the answer is simple: Data and next-gen digital payments tools that can unlock a more inclusive future for these next-gen workers, the SMBs looking to grow their businesses and the city governments wanting to maximize their investments in infrastructure and city services.
And, yes, even, in developed economies like the U.S.
Vosburg told Webster that Mastercard knows well the issues of financial inclusion and the need for governments and the private sector to work together to enable access to financial services. Until last week, the card network’s highest-profile efforts have been centered in the developing world – Latin America, Asia Pacific and Africa – in an effort to move cash digital.
But over the last 18 months or so, Vosburg told Webster that Mastercard has also been thinking much more deeply about the problems and challenges of financial inclusion in North America in general, and the United States in particular.
“The needs are no less important in the American market,” he explained. “They do, however, have a different feel because of the nature and level of development of the market, the role of government and the needs of local consumers.”
Although Vosburg acknowledged that developed markets don’t offer the “green field” advantage that comes from building new products and solutions from the ground up, these markets come with an established infrastructure to build on, and a set of well-established partners to work with.
The challenge for Mastercard, Vosburg told Webster, was finding a way to have the inclusion conversation in the U.S. that reflects the real pain points of people and businesses – and fosters a more inclusive partnership between the public and private sector.
The culmination of that effort, announced last week, is Mastercard’s Inclusive Futures project. The effort will address challenges in three key areas: digital solutions to manage finances and speed payments for gig and next-gen workers and small businesses, government services that foster greater innovation and efficiency, and new tools to enable smart cities to support this digitally inclusive future.
Finding a Focus
Inclusive futures, Vosburg acknowledged, started not with a master plan of what to build, but a master plan of who to talk to. And talk they did, he explained – to many constituents well outside the normal purview of a global card network: to government officials, civic leaders, religious leaders, non-profits, think tanks, a myriad of private sector organizations, representatives of special interest groups – you name the group, and Vosburg said they had a conversation, or many.
As densely populated cities are the microcosms of American society, said Vosburg, targeting them made it possible for developed solutions to scale, and even to create network effects in the process. Among those on Mastercard’s Inclusive Futures listening tour were New York, Atlanta, Chicago, Cleveland, Oakland and St. Louis.
Only then, he said, could he and his team step back and narrow the focus on where to, well, focus: Delivering digital (and faster) payments for gig and next-gen workers, digitizing SMBs as well as municipal services, and using data and digital payments tools to help solve cities’ most vexing problems, such as traffic congestion.
The New Worker
Among the needs that rose quickly to the top, Vosburg explained, were those of the emerging and expanding category of “gig” workers – whose issues, he told Webster, center around the problems of having a variable income stream and a fixed expense stream.
The challenges those workers face include more than just getting paid, and getting paid digitally. They also include budgeting, financial planning, scheduling, saving and qualifying for more mainstream financial products that can help with income smoothing.
Using Mastercard’s existing pre-paid card platform, Vosburg said that he and his team have created solutions that target this expanding class of workers and help alleviate the stresses that the lack of a predictable income stream creates.
In addition, he noted, it opened new doors for Mastercard to partner with private sector players, such as Care.com, to extend those solutions to their gig workforce. This partnership is about making it easier for Care.com caregivers to manage variable cash flows and personal finances by providing them with budget management tools and real-time payments for services rendered.
“Depending on whose estimate you read, one-third to one-half of American workers will be doing some kind of freelance work in the next year, so these solutions are extremely important,” Vosburg said.
The New City
Equally important, he noted, is the context in which this next-gen worker lives, and helping that environment become more efficient.
“We heard city planners express real concerns about the resource constraints facing them in managing their own infrastructure and collecting revenue to meet the needs of constituents,” Vosburg said, which goes well beyond digitizing paper-based payments.
The vision outlined in Mastercard’s City Possible private-public initiative is central to giving today’s cities the opportunity to become the smart cities of the future, and to delivering a portfolio of next-generation services to its constituents.
Vosburg said the challenge there isn’t so much a dearth of data and ideas, but being nimble enough to use it to innovate in the context of the municipal environment.
Those opportunities, he noted, can range from adding more educational resources to economically underperforming neighborhoods to even more innovative ways to optimize public transportation and ease congestion.
“Building more subway capacity is very expensive – and if trains are overburdened during peak hours, cities have two choices,” Vosburg explained. “They can build more capacity, or lower demand.”
Vosburg said that in test pilots so far, offering consumers reduced fare incentives for traveling at non-peak times has yielded promising results by reducing usage during those peak hours.
“That is a critical efficiency,” he added.
The Power of Partnership
It takes a partnership – or, more precisely, lots of them.
Delivering an inclusive future for cities, the governments that run them, the people who live and work in them and the businesses that want to grow their businesses in them, is too big of a job to go it alone, Vosburg acknowledged. Only through collaboration can a real impact be made.
Vosburg gave the example of a recent exchange with a local government official who wanted to do more to help businesses in a certain neighborhood to bring in more business. Mastercard, Vosburg told this local official, can pinpoint down to the specific block what spending in a neighborhood looks like, and where transactions are lagging. If those areas include a number of cash-heavy businesses, Vosburg said, investing in bringing digital payments to those businesses could help them attract more customers, thus enabling the entire neighborhood to flourish.
And those sparks, he told Webster as their conversation wound down, is the point of the program. As of today, Mastercard does not know exactly where this program will go – or exactly what services will be built into the inclusive future.
“It starts with interacting with people you wouldn’t normally interact with,” Vosburg explained. “Those new connections spark new ideas, and generate newfound enthusiasm for what’s possible. That’s when you have an opportunity to really make a difference.”