MasterCard (NYSE:MA) and the Inter-American Development Bank (IDB) have recently signed a keystone agreement, as announced at the World Economic Forum in Davos, Switzerland, to work together in an effort to improve economic inclusion, transparency and financial formalization through the expansion of electronic payments in Latin America and the Caribbean (LAC).
The five-year public-private partnership is intended to enhance access to information and promote the transition to electronic payment services in the region, which can help reduce transaction costs and increase the efficiency of financial disbursements. Replacing cash-based systems for electronic ones also can potentially reduce leakages, increasing the likelihood that payments and benefits end up in the hands of intended beneficiaries and recipients, helping to improve the lives of the underserved.
With this agreement, MasterCard becomes the IDB’s first corporate partner in transparency, making the company a pioneer in this type of public-private partnership. MasterCard will join the IDB and the Government of Norway in providing strategic advice to the IDB´s Transparency Fund. The Fund is the Bank’s primary source of grant financing for transparency -related projects and initiatives in Latin America and the Caribbean.
As part of the Bank’s public sector management agenda, the Fund has been a key catalyzer of investments in this area, creating synergies between projects in an $800 million portfolio (2008-2012) to help governments in the region. To date, the Fund has supported 11 governments in transitioning to more efficient and transparent systems, and will support four additional governments in 2014.
Finally, according to the agreement, MasterCard and the IDB will actively collaborate in annual events such as the IDB Annual Meeting, FOROMIC, the MasterCard LAC Payment Innovation Forum and other key forums to promote thought leadership efforts and the dissemination of best practices in transparency, economic inclusion and electronic payments.