Mastercard to help the unbanked receive payments
Small businesses and individuals struggling to enter the digital economy are getting a boost from Mastercard, as the need to receive funds electronically and make digital and contactless payments has been highlighted by the COVID-19 pandemic.
The payments processor is committed to connecting 1 billion people and 50 million small businesses to the digital economy by 2025. This commitment is an extension of its 2015 pledge to bring 500 million people who do not do not have digital access to financial products in the system.
Nationally, 6.5% of households in 2017 did not have a bank account and 18.7% had accounts but also used financial services outside of insured institutions, according to the FDIC. Households without a bank account are considered “unbanked” while households with bank accounts that use products such as payday loans, check cashing and money orders are referred to as “underbanked”.
Mastercard’s pledge also includes providing stimulus payments to millions of Americans who have reloadable prepaid cards, including those who participate in the U.S. Treasury’s Direct Express program, which helps unbanked people receive federal benefits. , such as social security. Mastercard’s initiative could help vulnerable communities that are unbanked or underbanked stay safe by not having to go out and deposit paper checks, and instead receive them in prepaid cards.
“This crisis has highlighted how vulnerable individuals and small businesses are to an economic shock,” Mastercard vice president Mike Froman told USA TODAY. “It would help the people at the base of the pyramid achieve 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 women entrepreneurs digitize their operations and access microloans. During the current coronavirus crisis, digital payments have allowed them to continue to provide same-day loans to women entrepreneurs in need, the company said.
In addition to providing small businesses with the technology needed to make the transition to the digital economy, Mastercard said it will provide training in financial literacy and the proper use of technology to achieve better financial security.
“There are still over a billion people in the world who are unbanked, who have no formal relationship with the financial system. They operate in gray areas and 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, ”he said. declared Froman.
In addition to the pledge, Mastercard said it will commit up to $ 25 million to establish the COVID-19 Therapeutic Accelerator to fund clinical trials to identify very potent immunotherapies for the COVID pandemic. 19. This initiative is in partnership with the Bill & Melinda Gates Foundation, the Chan Zuckerberg Initiative and others.
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