By Michael Fiore, Mastercard
Five years ago, two and a half billion people weren’t included in the financial services mainstream. That meant half of the world’s adult population was either unbanked or underbanked. Mastercard set out on a journey to change that. Working with a range of partners, we committed to using our network, our products and our solutions to help bring more people from more places into the financial fold.
We’re making headway. We’ve connected hundreds of millions of these consumers to electronic financial accounts—and prepaid has been a critical part of that success. We’ve made strides across countries, sectors and industries because prepaid is a flexible platform that enables us to reach consumers more cost effectively and more conveniently. But that’s not all. We’re working with governments, issuers, merchants, NGOs and international development organizations like the UN and the World Bank. Together, these partnerships and our shared commitment to financial inclusion are changing the game for how inclusion gets done and humanity gets helped in the first half of the 21st century.
We’ve learned a lot along the way. First, you can’t go it alone. If we’re going to have a true impact on financial inclusion, we must work across sectors on behalf of the 2 billion people who are still currently excluded. Second, we need public-private partnerships. Financial inclusion is too big a task for anyone to believe they can tackle it on their own. Silos won’t work. Owning solutions end-to-end won’t work. Partnerships among different players within the private sector and partnerships between governments and the private sector are key. Public-private partnerships are mission-critical because they’re the fastest, most efficient route to financial inclusion.
Why? Because globally, the public sector represents the single largest, flow of money to the financially excluded. About 30 percent of what they receive comes from governments via social security payments and other benefits. We need the public sector to help with regulations, to help with a citizen identification system to facilitate know your customer compliance and to help with a good business climate. The private sector brings: distribution, innovation, efficiencies and execution.
Third, just because a person has an account doesn’t mean our job is done. Those accounts must be used. And too often, they’re not. We need to bolster usability of accounts. A study by the Gates Foundation and McKinsey & Co. found that in countries where more than 70 percent of people can pay digitally, financial inclusion is more than 85 percent.
Five years later, progress is being made. But with 2 billion people still excluded, more has to be done. As we go into 2017, our focus will continue to be on account usage and acceptance to ensure clear and sustainable value for the consumers and merchants that participate. We’re doing it through more partnerships. We’re doing it through more innovation. We’re doing it with the same compassion and care. All of these come together in something called The MC AID Network.
MC Aid, which was named 2016 Pay Awards Change Agent of the Year, was developed working in tandem with NGOs like World Vision to deliver humanitarian aid more efficiently, more effectively and more transparently, even in war-torn areas. We’re providing a way for refugees and the displaced to buy what they need, when they need it, using electronic vouchers accepted at local merchants. And they’re able to do it safely, conveniently and with the dignity every human being deserves.
For us, it’s about being in the business of making a difference in a way that makes for greater dignity and choice. With our partners, we’re on track to include 500 million people, 40 million micro and small merchants and an additional 2 million refugees into the world’s financial systems by 2020.
But I want to reiterate that financial inclusion is a strategic part of our business model. We’re making enough to sustain our efforts while we work to secure market advantages down the road. What drives our efforts is our belief that you can be profit-driven and purpose-driven. That you can do well and do good. We remain more focused than ever on delivering for our bank customers, our business partners and governments as we navigate new regulatory realities. We remain more focused than ever on our customers and our consumers who are at the center of all we do. Paying with simplicity, security, flexibility and convenience, whether you’re at the top, the middle, or the bottom of the financial pyramid—in a developed or developing country—that’s the power of prepaid.
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