Geneva: 5th February 2018

International Labour OrganisationMobile money and digital payments -

Opportunities to support the Decent Work Agenda

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•Introduction

•Why Mastercard supports Financial Inclusion

•Shadow economy and cashless society

•Government/B2B/migrants/youth/SMEs

•Payroll

•Case studies:

•Q & A

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Global Underservered payroll is still largely cash based

CONTEXT AND CHALLENGE

people around the world get

their private sector payroll in

cash.

280

Million

RISKY

Employers face risk of theft or fraud in transportation , storage

and distribution of wages

The loss or theft of cash wages can significantly reduce the take

home pay of workers

INEFFICIENT

Employers expend extensive resources in administering cash payroll, from counting cash to

distributing it

Workers often have to stand in line to receive cash wages, which cuts

into their productive or personal time

DISEMPOWERING

Women are especially vulnerable and have less control over their wages

when they are paid in cash

Cash inhibits savings, which reduces workers’ resilience to economic shocks such as illness or loss of

employment.

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Textile manufacturing is the largest non-farm sector driving Underservered employment

OPPORTUNITY

in salaries primarily disbursed in

Cash$70

billion

93 million people are

employed in the textile,

clothing and footwear

sector worldwide

(ILO - 2017)

¾ of garment

workers worldwide

are female

(Her Finance, 2017)

Size of global apparel

trade is estimated to be

close to $1.2 trillion

(WTO, 2016)

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The Mastercard Prepaid Payroll Card

A reloadable prepaid card

• Payroll is loaded to cards the same way payroll would be direct deposited into bank accounts.

• Provides automatic, reliable, on-time payments to employees plus additional services including balance inquiry and remittances

• Benefits similar to those of typical debit accounts, ATMs, plus the ability to pay anywhere MasterCard is accepted

Easy to implement

• Simple implementation process – Employer collects KYC info from employee and provides information to program manager for card issuance

• Leverages current payroll processors and issuing bank system infrastructure to minimize costs

Fast, simple and cost-effective

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Prepaid Payroll Cards Satisfy the Needs of Many Types of Commercial Customers and Their Employees

.

Type of Employee Type of Employers

Per Diem orProduction-based Workers

Seasonal Workers

Underserved/migrant Agriculture, fast food restaurants, construction, hospitality, manufacturing, and high turnover retail such as convenience stores, auto repair

Consultants, travel companies such as cruise lines, learning centers

Hospitality, agriculture, landscaping, painting or other summer employment, snow clearance etc.

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Prepaid Payroll Cards Offer Benefits Typical ofMost Debit Accounts but Better than Cash Payouts

Consumer NeedMasterCardPayroll Card Debit Cash

ATM cash access

Immediate access to funds after disbursement

Ability to send money to family xAbility to add funds to account

Online bill payment / Mobile banking options xCan be used in-store, online and via phone to shop and pay bills xReplaceable if lost or stolen xFraud Monitoring x

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Case studies

1. B2B payments – Unilever & Mastercard

2. Payroll - UAE & Egypt

3. Role of government legislation - Greece

4. Tax collections – Italy

5. Welfare payments - UK

6. SME mobile payments – Italy & African markets.

7. Micro-loans – India

8. Humanitarian aid – UNHCR in Greece

9. Welfare disbursements - Kenya

Unilever & Mastercard SME Partnership

©2016 MasterCard Proprietary and Confidential

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Concept: Use digital financial history to raise credit worthiness of SMEs.

Use of digital mobile wallets by small traders to buy stock from Unilever etc.

Reduce delivery frequency: increase range of goods: expand business, accept digtal payments from customers.

Operate in conjunction with projects to build digital payments.

Emerging markets with large population and large number of small distributors

Developed market with large base of small independent stores

s

Based on approved access to credit

Markets

• Test Market: Kenya

• Initial roll-out: Nigeria, Indonesia, & India

• 28 markets in which Unilever has similar distribution setups

Timing

• Test launch June 17

• Roll-out from Q1 18

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UAE: ADVANCING FINANCIAL INCLUSION

with Mastercard Prepaid Payroll Solutions

CONTEXT:

• 7.3 Million immigrant workers out of a

total population of 9.3MM

• 90% of the labor force comes from

India, Pakistan and Bangladesh

• Minimal wage transparency led to the

centralized Wages Payment System

initiated by the Ministry of Labor

SOLUTION:

• Mastercard with its partners National

Bank of Abu Dhabi (NBAD),

UAEXchange & C3 Payroll

launched a payroll offering targeted

at immigrant workers in the UAE

• Solution features included e free

ATM access & connecting to the

HomeSend remittance gateway to

send money home

• Offered a safe and secure way for

consumers to save, transact and

send money to family

• Engagement with company mangers

and accounting teams to educate

workers about the features and

mechanism of using the card

OUTCOME:

• Over 1.8 MM cardholders on the

program

• Streamlining payment issuance

processes for over 4000 companies in

the UAE

• Since the launch of the program in

2011, financial inclusion (measured by

the world bank) in the UAE has risen

from 60% in 2011 to 84% in 2014

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EGYPT: ADVANCING FINANCIAL INCLUSION

with Mastercard Prepaid Payroll Solutions

BACKGROUND:

• In 2008, the Central Bank

of Egypt (CBE) and the

Ministry Of Finance (MoF)

began seeking ways to

promote financial inclusion

in Egypt.

• Only 10% of the population

of nearly 90 million had a

banking relationship.

CHALLENGES:

• To catalyze change, initiated a program to

provide government employees with a safer and

more convenient method of receiving their wages.

• Payroll was distributed primarily in cash from the

government, but some entities had private label

cards issued by a state owned entity owned by

the Ministry of Finance (MoF) for ATM cash

withdrawals.

• In many instances, Egyptian workers had to wait

in line for several hours before getting their cash

disbursement.

• Managing disbursement of regular and recurring

cash payments to over six million government

employees was very costly, time consuming, and

posed a challenge to keep clear and concise

records.

SOLUTION:

• Mastercard worked in partnership

with the Central Bank of Egypt to

introduce a prepaid card program,

which would enable MoF to

distribute funds in a timely manner.

• Additional key partners were the

public State banks: National Bank of

Egypt, Banque Misr, and Banque du

Caire.

OUTCOME:

• Today, more than 4.6 million cards

have been issued to government

employees in Egypt

• Enabled the CBE and the MOF to

deliver on their objectives of financial

inclusion and reduction of cash

payments and management costs

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GREECE: ADVANCING FINANCIAL INCLUSION through

comprehensive Government legislation

MAIN PROVISIONS, legislation passed December 2016

Link between e-payments and the tax-free amount.

• For incomes up to €10,000 the citizens must spend at least 10% digitally.

• For incomes from €10,001 to €30,000, at 15%

• For incomes above €30,001 at 20%

If a tax payer does not comply, she gets charged 22% tax on the shortfall.

Maximum cash transaction between consumer and business is lowered to €500.

Mandatory acceptance of card payments for specific merchant and professional categories identified with a Ministerial Decree from the Ministries of Finance and the Ministry of Economy.

Obligation for merchants to inform consumers on the acceptance of card payments.

Introduction of lotteries to engage & reward citizens, and fines for trader non-compliance.

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Italy’s wide-spread use of electronic payments supports government drive for transparency and convenience

PAGE 14FEBRUARY 13, 2018

• Cooperation between all parties made the transition for merchants quick, painless at a low cost

• Approximately 110 000 POS terminals able to accept contactless payments by the end of 2017

• Consumers benefit: no more long queues, simple and safe payments of bills, rents, fines and taxes.

Increase and improve electronic acceptance in order to facilitate tax collection, reduce fraud and make payments smooth and efficient

New acceptance prospects: ITB, Lottomatica, Sisal…provide 75 000 new POS.

Poste Italiane: historical government tax collection partner provide postmen with mobile contactless POS

Objective

Solution

Key Results

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New acquiring value proposition

including both standard and Mobile

POS with discounted pricing.

Business prepaid card with the

functionalities of a «light account»,

easy to activate and use.

POSTEPAY EVOLUTION BUSINESS POS & mPOS

PHONE APP

• Management dashboard

• Online account

management

• Online payments.

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SME introductory bundles: e.g. Banco Posta

& Poste Italiane

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• Masterpass QR – digital payment service.

• Supports mobile-driven Person-to-Merchant payments, enabling millions of micro, small and medium enterprises to move from cash to digital payments.

• Rolled out to 36 African markets

• Micro & small business owners can increase revenue through the acceptance of mobile and digital payments.

• Reduces exposure to risks and costs of managing cash.

• Payment is instantaneous and guaranteed, significant improvements to cash flow, supply chain and inventory.

Ecobank launches Masterpass™ QR in Nigeria

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Farmers’ Star Bhoomiheen Kisan Card (Star BKC), Faridpur, India

Providing micro-loans on Mastercard pre-paid cards.

What?

• Farmers receive micro loans from banks on a pre-paid Mastercard, to use to buy agricultural products: seeds, fertiliser, equipment.

How?

• Applicant applies direct to bank, with KYC from reputed NGO or farmers cooperative. Branch manager approves eligibility with Farmers’ Club, + ID card, tenancy agreement etc.

Details.

• 100K farmers signed up in 8 months.

• Term loans & cash credits, maximum loan Rs. 24,000 (€325) Gold: 5x times annual farm income or 50% of the value of land.

• Repayable within 12 months, higher loans with successful repayment.

Benefits.

• Provides easy access to short term production and consumption credit to meet genuine requirements of tenant farmers and share croppers.

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UNHCR payments in Greece:

• 32,000 cards issued in 2017

• Ave load €225

• English & Arabic, plus multi-lingual help-desk.

• UNHCR consolidate all NGO cash payments into one.

• Initially – full cash out.

Humanitarian payments

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$900 million payments are disbursed

annually by the Kenya Government.

The Kenya Huduma Government Card will

be issued to 15 million New Consumers.

Estimated 24 million MasterCard Send

disbursement transactions

Enabling government payment flows is a critical path towards supporting Financial Inclusion

Kenya Government Huduma programme

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Appendices

1. Levi & Mastercard payroll -detail.

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Top 40 Brands account for 80% of the apparel trade

MASTERCARD & LEVI PARTNERSHIP -BANGLADESH

With strong CSR goals that link to Worker Well-being and Labor

Rights

Wage Fairness and Benefits

Child LaborForced/Bonded

Labor

Working hour abuse

Discrimination and Worker

Abuse

Working Conditions

Mastercard and Levi’s have

initiated a partnership to

integrate financial inclusion into

Levi’s Worker Well-being

objectives.

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Hypothesis: Financial inclusion can help

1 Improve Worker Well-being

2 Reduce cost of Payroll disbursement

3 Augment verification and compliance processes

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Today – payroll can be an ordeal for recipients

Mugged/ robbed on the way back

Even by cheque, I lose 3% to encash

Need to pay this cash courier a fee to remit money to my parents.

Not sure what my wage should be – why does it vary so much?

Am not getting my benefit payments

Where is my overtime payment?

Where do I keep this money safe? I live with 5 other people!

I can’t budget, because I don’t really know much I have each week.

If I get sick, I lose everything

I don’t want to give all my money to others in my family!

Every disbursement turns into an ordeal for these vulnerable citizens,

making the receipt of their economic lifeline difficult and challenging.

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24SOURCE: MASTERCARD ANALYSIS, BTCA, ILO

With a high cost for the worker and factory owner alike

7.2

2.6 0.8

4.6

1.2 0.0

1.3

0.2

-

2.0

2.9

0.7

0.2

1.1

0.3

4.8

-

-

CASH CHECK ELECTRONIC

Administration Data Management

Security/Safe keeping costs Collection Costs

Cash Management Costs Leakage/ theft costs

Payroll Provider:

Payroll Recipient:

13%

7%

20%

4%

4%

8%

0.8%

1%

1.8%

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Compliance process is expensive and lacks transparency

Visual Observation

Records Review

Factory mngtinterviews

Information from workers

External information

Compliance

Chapter Finding/ Requirement Importance

Minimum

Working Age+ 15 years

Zero

Tolerance

Ethical

Standards –

Record Keeping

2 sets of time records to

hide overtimeZero

Tolerance

Ethical

Standards -

Ethical

Practices

Workers Hired and Fired

to avoid benefitsImmediate

Action

Working Hours

– 7th day rest

Workers ineligible for a

day offImmediate

Action

Working hours

– Record

Keeping

Workers not allowed to

punch in overtimeImmediate

Action

Wages and

Benefits –

Minimum WageMinimum wage compliant

Immediate

Action

Wages and

Benefits –

Minimum Wage

All overtime hours

worked should be paidImmediate

Action

Global compliance costs for the apparel industry is estimated to be as high as $300MM

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Leveraging technology to resolve system opaqueness

IdentityAccess

ManagementPayments

• Underage Labor

• Unauthorized Labor

• Hire-and-Fire Policies

• Working Hour

Compliance

• Unauthorized factory

floor access

• Overtime compliance

• Transparent auditable

wage payments

• Minimum Wage

enforcement

• Overtime guidelines

Rich, Robust, Independent Data

Technology Transparency

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27INDICATIVE LIST OF FEATURES – FINAL SOLUTION WILL DEPEND ON MARKET SELECTION

And providing workers a Smart, Easy and Secure Way to Get Paid.

Security Control Convenience Value

• Safe secure

“store of

value”

• Zero

Liability

• ID Theft

Protection

• Alerts

• Balanc

e

inquirie

s

• Free ATM

finder

• Cash

Access

• reloadable

• Bill payment

• On-line

useage

• Insurance

benefits

• Merchant

offers

• Education

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Leading to benefits all around

• Transparency

• Path to further

financial opportunity

• Reduce cost of

receipt

• Safeguards

• Reduced risk –

Personal and

Financial security

• Improved worker

morale, reduced

absenteeism,

productivity

• Reduce cost of

payments

• Reduce compliance

and remediation costs

• Fully auditable

• Worker Morale,

absenteeism, retention

and productivity

• Transparency

• Data based Verification

• Direct visibility

• Preventive measures

• Tackle “fake news”