Mastercard is teaming up with global apparel companies, Marks and Spencer, Levi Strauss and Co., and VF Corporation, to pilot a scheme to pay garment workers digitally, to ensure that workers receive their wages “securely and consistently”.
The new hybrid digital payment initiative, in connection with global nonprofit Business for Social Responsibility (BSR), aims to improve the wellbeing of garment factory workers, who currently lack access to the financial tools and services that can help them and their families thrive.
Around the globe, 230 million adults, nearly 85 percent of adults in low-income countries, who work in the private sector receive their wages in cash, explains Mastercard. This creates significant challenges for both employees and factory owners, as not only are workers at risk for theft, but they also have limited ability to save and often have to take days off to travel miles to pay household bills.
Pilots for the scheme are currently being coordinated by Mastercard and its partners in Egypt and Cambodia, with participating factories being able to deposit wages directly into their workers’ accounts, who can then set up debit or prepaid cards, or digital wallets. The initiative also provides hands-on peer training on digital financial services, financial planning and management, and how to discuss finances with family members to help make workers feel comfortable and confident transacting digitally.
“At Mastercard, our vision is to ultimately build a new ecosystem of partners – garment industry, technology, not-for-profit organisations, factories, banks – that work together to deliver social impact at scale. It’s an important step in helping workers feel safer, be more resilient and more financially independent,” said Sue Kelsey, executive vice president, prepaid solutions, Mastercard in a statement. “We’re committed to help digitise wages throughout supply chains across industries and continents, turning access into usage and in turn, fuelling growth of local economies.”
In addition to providing a more secure financial future for workers, digital payroll can also create cost savings, increased efficiency and greater transparency for companies, added Mastercard. Garment factories that shift to digital payroll, have experienced a 53 percent savings in staff time for the teams that count and disburse wages, according to data collected through BSR’s HERfinance programmes, while moving to digital payments has also increased access to savings accounts for factory workers from 28 percent to 43 percent.
Michael Kobori, vice president of sustainability at Levi Strauss and Co., said: “Mastercard is an excellent partner for a pilot programme like this, due to the infrastructure they have built around digital payment systems coupled with our longstanding commitment to the well-being of workers.
“We look forward to seeing the outcomes of the pilot and hope this advances efforts to realise the potential of digital payments to benefit workers across apparel supply chains.”
It is hoped that the digital payments will be especially helpful to women, who account for 68 percent of all garment workers and are more financially vulnerable. In a recent study from the International Growth Centre, it found that 75 percent of female garment workers currently lack basic financial literacy.
Lydia Hopton, global ethical trade manager at Marks and Spencer, added: “As the UK’s biggest clothing retailer, we recognise the importance of collaborating with others in the industry to create momentum and change.
“Paying people, particularly women, through a digital solution creates economic opportunities for them and their families, and it’s a project we’re proud to be working with Mastercard and other global brands on. Together, we can create sustainable change to improve people’s lives worldwide.”
Director of HERproject, Christine Svarer, stated: “Digitising wages is an area where companies can make relatively small investments and have huge positive impacts, especially for low-income women workers.
“But to realise these positive impacts, it is vital to ensure that workers have the skills and knowledge to benefit from the transition and that factories are supported during the process. We are delighted to be partnering with The Mastercard Center for Inclusive Growth and leveraging our experience in this space to make digital wages a success story.”