international labour organisation - ilo.org · unilever etc. reduce delivery frequency: increase...
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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
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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”