©2014 MasterCard.

Proprietary and Confidential

Scaling Financial Inclusion Through Partnerships & Technology

Ed Brandt & Anna Zanghi - MasterCard

©2014 MasterCard.

Proprietary and Confidential

MasterCard has Government payment programs in over 50 countries …

Page 2

Electronic payments facilitate a

range of Government programs

• Social benefits

• Subsidies (e.g., food, school

books, scholarships)

• Payroll (e.g., police)

• Insurance

• Home loans

• National ID card, authentication

• Refugee assistance

• Transit

• Procurement

• Travel Cards

• Purchasing Cards

©2014 MasterCard.

Proprietary and Confidential

Financial Inclusion Challenges and Solutions

• Understanding the Opportunity

• Building the Ecosystem

• Public Private Partnerships Enabling Scale

• Innovating with Digital Technology

• Solving Identity and Responsible Access

©2014 MasterCard.

Proprietary and Confidential

The Opportunity: Burden of Cash-Based Economies on Underserved

Lack of formal, secure place to store & accumulate

assets

Target for crime & theft

Financial illiteracy

Shocks like fire/flood/theft can eliminate

all stored assets

Time away from income-generating activities to

pay bills

July 31, 2014

Page 4

COST OF CASH COMPLEXITY: ~1.5% OF GDP

©2014 MasterCard.

Proprietary and Confidential

Mexico: EcoSystem Building Through Social Payments

The Program: Prosera (formerly Oportunidades)

• Govt. incentives for families in poverty ensuring children:

– attend school

– visit doctors

– receive proper nutrition

• $5b distributed to 6.5mm families (20mm beneficiaries)

Government Objectives

• Drive Financial Inclusion

• Realize “Cost of Cash” opportunity

Primary Challenge

• Lack of payments ecosystem limited use of debit cards

for financial transactions

– 80% cards used for identification only

©2014 MasterCard.

Proprietary and Confidential

MasterCard’s Mexico Solution Organizing the Payments Ecosystem

Distribution

channels

Social

benefits •Payment of

social benefits

Consumers Merchants

Network Deposits

•Agent Banking

Micro

Finance

• Analytics

• Business

support

• Acceptance

Remittances

CASH-IN

•US –México

corridor

•Cash to card

Merchants

Network

POS as a

revenue

center

• Bill Payments

• Top Ups

• Insurance

• Incremental

sales

Government

Policy

• Regulation to enable ecosystem

• Know Your Customer

• Transaction limits

• interchange

• Switching/Processing requirements

New

acceptance

model

• Mobile • New devices

• Aggregators

Research on Effective

Ecosystem Construction

Page 6

Micro

Loans

Enabling

Acceptance

USAGE

• Supply Chain

Management

©2014 MasterCard.

Proprietary and Confidential

Harnessing Technology & Public Private Partnerships

When public and private partnership

is directed and well-organized,

it is possible for government and citizens

to realize impressive gains and savings.

©2014 MasterCard.

Proprietary and Confidential May 27, 2014

Page 8

South African Social Security Agency

©2014 MasterCard.

Proprietary and Confidential

South Africa: Leveraging Digital Technology Page 9

11/10/2014

Portable Electronic Enrollment

Biometric Technology

Instant Issuance

Recipient Education

Pmts. Ecosystem Development

Enabled small “Spazza” shops

Partnered with non-traditional players

Enabled Cash at Point of Sale

©2014 MasterCard.

Proprietary and Confidential

A tailored multi-function card delivers

value beyond traditional payments when

citizens have identity and inclusion while

governments reduce the costs of cash.

Identity / Payment Cards: Value beyond traditional payment products

©2014 MasterCard.

Proprietary and Confidential

From Oakland California to Nigeria

June 18, 2014

Efficiently Enabling Financial Inclusion

for Millions

©2014 MasterCard.

Proprietary and Confidential

Prepaid payment cards remove barriers to youth financial inclusion…

Page 12

April 3, 2013

• Not eligible 1

• Available to anyone - no credit check

• Protection against indebtedness

• Works like a basic bank account

• Not affordable 2 • Lower costs than traditional bank

accounts

• Transparent pricing

• No access 3

• Increased competition increases

choice

• Mobile form factor enables deeper

distribution

Barriers to Financial

Inclusion for Youth

Advantages of Prepaid

Payment Accounts

©2014 MasterCard.

Proprietary and Confidential © 2014 MasterCard. Proprietary and Confidential

November 10, 2014

Taterstan Republic (Russia): Combining financial education & access for youth empowerment

sample The Program: Taterstan School Bank & ID

• School ID to improve security & access

• Attendance tracking

• Responsible financial product to reduce cash:

– No cash withdrawals or internet purchases

– Canteen, transit & extra curricular

– Financial education

Government Objectives

• Savings for agencies managing municipal schools

• Reducing cash handling

– 20% savings covered all hardware cost over 6mths

Primary Challenge

• Setting up technology ecosystem in schools

©2014 MasterCard.

Proprietary and Confidential

Available at:

http://newsroom.mastercard.

com/press-releases/new-

resource-available-to-help-

banks-create-products-for-

children-and-youth/

Page 14

Defining Responsible Financial Access & Education for Children & Youth

©2014 MasterCard.

Proprietary and Confidential

Our Key Learnings So Far

Financial Inclusion Fundamentals

– Electronic payments

– Access and usage

– Public private partnership

– Consumer education

Financial Inclusion Accelerators

– Open payment systems

– Inclusive ecosystems

– Consistent financial flows

©2014 MasterCard.

Proprietary and Confidential

Every child and youth has a right to safe, accessible financial services, and we need to empower them to

grow into productive economic citizens

Ajay Banga Banking A New Generation

March, 2014

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