IFC, MasterCard expand electronic payment agreement

The International Finance Corporation, an arm of the World Bank Group, has signed an agreement with MasterCard Incorporated to establish a risk-sharing facility, which is expected to provide millions of people in emerging markets access to electronic payments.

A statement by MasterCard described the agreement as a crucial step in the organisations’ ongoing collaboration to increase universal financial access by 2020.

“Electronic payments lower the cost and increase the security of transactions, benefitting small businesses and consumers; financial institutions in developing countries are keen to expand services but are often held back by collateral requirements necessary to cover settlement risks,” the statement added.

To address these constraints, the IFC and MasterCard are setting up a $250m risk-sharing facility that will provide the alternative coverage and share the settlement risk of participating among emerging market financial institutions, according to the United States-based payment company.

“It is expected to lead to the issuance of millions of new cards, the majority of which will be debit cards for lower income customers; the focus will be on countries where inclusion needs are the greatest or where payment platforms are nascent,” it added.

It said the agreement would make new financial institutions to join MasterCard’s network and for the existing ones to grow their payment service offerings and reach a wider segment of customers.

The Executive Vice-President and Chief Executive Officer, IFC, Mr. Jin-Yong Cai, was quoted as saying, “The facility is a key step in the World Bank Group’s efforts to support the development and expansion of private sector electronic payments in emerging markets and reach our goal of universal financial access.

“It will benefit individuals and small businesses by improving the availability of non-cash financial services, which are safer, more transparent and more efficient than cash.”

The Chief Executive Officer and President, MasterCard, Mr. Ajay Banga, said, “To reach MasterCard’s goal of an additional 500 million people connected to financial services by 2020, we must all roll up our sleeves and get creative in how we build public-private partnerships.

“This partnership with the IFC is a model for how we can create opportunities and remove barriers for banks to include more people in the financial fold.”

SOURCE:PUNCH