With the Covid-19 pandemic threatening the future of companies across the world and creating uncertainty for many individuals, financial services organisation Mastercard is responding by vowing to bring a total of one billion people and 50 million micro and small businesses into the digital economy by 2025. The company has committed $500m to close the racial wealth and opportunity gaps in communities in the US.
“Financial inclusion is key for Mastercard and the organisation’s Center for Inclusive Growth goes a step further, by focusing on financial security,” says Payal Dalal, senior vice-president, social impact, international markets. “We are ensuring access [to financial services] and driving toward usage, capability and trust.”
Dalal joined the Center for Inclusive Growth in 2018 as a vice-president focusing on global programmes, before being promoted to senior vice-president to oversee social impact across Mastercard’s international markets. The Mastercard Center for Inclusive Growth focuses on “advancing equitable and sustainable economic growth and financial inclusion around the world”.
Mastercard focuses on small business resilience
“Before we talk about small businesses’ growth, we need to talk about the financial resilience of small businesses,” says Dalal. “Before they can thrive, we need to ensure that small businesses can survive given the challenges they are facing due to the Covid-19 outbreak.”
Before they can thrive, we need to ensure that small businesses can survive given the challenges they are facing due to the Covid-19 outbreak.
Indeed, many small businesses were prevented from operating physically as a result of the pandemic, forcing them to up their digital game. Many companies that already had a web presence were able to accept online payments, or interact with their customers digitally. However, this was not the case for all, leaving many smaller businesses with large obstacles to overcome.
“A key challenge that small businesses have to navigate is cybersecurity,” says Dalal. “Mastercard has been looking at small businesses and trying to help to ensure that the digital economy is inclusive. We want to make sure that small businesses have access to the digital economy as well as the tools they need to succeed and to be safe and secure.
“At the Center for Inclusive Growth, we are working at both the ecosystem and institutional level by helping financial service providers, including microfinance institutions, to modernise their processes, and we are introducing financial technology into their business models to assist in developing new forms of digital training for micro and small businesses.”
Indeed, Mastercard is currently helping 100,000 small businesses with digital transformation in Poland, as part of a Covid-19 relief programme, where it provides one-to-one advice along with webinars on sales and online marketing. It is also working with digital platforms in Latin America to help bolster the financial security of gig workers and entrepreneurs.
“It is about making sure that small business owners have the capability and resources to access markets and customers; the digital economy can be a great enabler, but all the tools, skills and capital need to be in place,” says Dalal.
Assisting in the acceleration to digital
“We have seen an acceleration to digital across the globe,” continues Dalal. “This has heavily impacted inclusive growth, because people who weren’t part of the digital economy are being further left behind. The digital economy offers opportunities, but it can also exacerbate inequality. That is why we have to think about digital inequality in addition to income and information inequalities.”
Indeed, the outbreak of the Covid-19 pandemic has highlighted the need to shift away from a cash-based system towards use of digital financial services and payroll digitalisation. This is a key topic for Mastercard, as its Center for Inclusive Growth joined forces with BSR’s HER project – a collaborative initiative that strives to empower low-income women working in global supply chain – in 2018 to “scale up wage digitisation for ready-made garment factories and workers” in Bangladesh, Egypt and Cambodia.
The digital economy offers opportunities, but it can also exacerbate inequality.
In fact, “by simply changing the way in which women factory workers receive their wages, we can shift household power dynamics, advance financial inclusion and drive economic empowerment”, the company’s website says.
However, Dalal stresses that just because someone goes through the transition from cash to digital, this does not mean adoption will be seamless. For example, in its work with digital payrolls in garment factories, Mastercard helps women navigate socio-cultural issues in addition to providing financial and digital literacy.
“We had a lot of sessions with the women, not only on how to use a digital wallet and on how to think about saving, but we also had constructive conversations about more active ownership of their financial assets with their families,” says Dalal.
Why a gender intentional approach matters
“It is important to recognise and see how [a gender intentional approach] is going to lead to women’s economic empowerment,” says Dalal. “The recession that we are in is disproportionately impacting women. As we think about driving an inclusive economic recovery, we have to be gender intentional – and that is a call to action for the private and public sectors. We need to apply a gender lens to everything we are doing.”
Indeed, data suggests that the Covid-19 crisis has disproportionately impacted women. A McKinsey report reveals that women’s jobs are 1.8 times more vulnerable to the Covid crisis than those held by men. It also reveals that women account for 39% of global employment, but have suffered 54% of overall job losses since the pandemic started.
Indeed, the fact that women’s employment levels are dropping faster than the average will negatively affect the UN’s gender equality and female empowerment targets, which make up its fifth Sustainable Development Goal. Covid-19 has also negatively impacted women’s access to education, as female students are at particular risk of not retuning to the classroom, as other recent epidemics have shown.
Dalal says: “If we want to make the digital economy work for everyone, everywhere, we have to think about what the barriers are that are preventing people, especially women, from accessing and using it, whether it is a lack of access to data, a lack of device ownership, a lack of broadband, a lack of agency or a lack of skills. Otherwise, the digital economy simply won’t be inclusive.”
Dalal highlights that the role of digital payments, financial services and financial technology is more important in economic recovery than ever before. This is because there is now an opportunity for digital financial service providers to think about the diverse needs of all populations, whether it is their core customer base or potential new consumers. As a result, Dalal concludes that there is a real opportunity to make economic recovery inclusive.