Mastercard to help unbanked people get paid

Small businesses and individuals struggling to enter the digital economy are receiving a boost from Mastercard as the need to receive funds electronically and make digital and contactless payments has been underscored by the COVID-19 pandemic.

The payment processing company pledges to connect 1 billion people and 50 million small businesses to the digital economy by 2025. This pledge is an extension of its 2015 promise to bring 500 million people without access digital ready to financial products in the system.

nationally, 6.5% of households in 2017 had no bank accounts, and 18.7% had accounts but also used financial services outside of insured institutions, according to the FDIC. Households without bank accounts are considered “unbanked” while households with bank accounts that use products such as personal loans, check cashing and money orders are referred to as “underbanked”.

Mastercard’s commitment also includes providing stimulus payments to millions of Americans who have reloadable prepaid cards, including those participating in the US Treasury’s Direct Express program, which helps non-banking people receive federal benefits. such as social security. The Mastercard initiative could help vulnerable communities that are without a bank or under the counter stay safe by not having to go out and deposit paper checks, and instead receive them in prepaid cards.

“This crisis has underscored how vulnerable individuals and small businesses are to an economic shock,” Mastercard vice president Mike Froman told USA TODAY. “This would help the people at the bottom of the pyramid gain greater financial security.”

The company also said it aims to help 25 million female entrepreneurs transition to an electronic transaction model. Previously, Mastercard helped low-income female entrepreneurs digitize their operations and access microloans. During the current coronavirus crisis, digital payments have allowed them to continue making same-day loans to businesswomen in need, the company said.

In addition to providing small businesses with the technology to make the transition to the digital economy, Mastercard said it will provide training on financial literacy and the correct use of technology to achieve better financial security.

“There are still over a billion people around the world who are not banking, who have no formal relationship with the financial system. They operate in gray areas and in an informal economy, which makes it very difficult for them to access the kind of tools they need to achieve greater productivity and set themselves on the path to greater prosperity, ”Froman said.

In addition to the pledge, Mastercard said it will pledge up to $ 25 million to establish the COVID-19 Therapeutics Accelerator to fund clinical trials to identify highly potent immunotherapies for the COVID-19 pandemic. This initiative is in partnership with the Bill & Melinda Gates Foundation, The Chan Zuckerberg Initiative and others.

Follow Coral Murphy on Twitter @CoralMerfi

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