33363 - MasterCard

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Summary of Investment Information

Project Number

33363

Company Name

MASTERCARD RISK PARTICIPATION FACILITY

Date SPI Disclosed

Mar 9, 2015

Country

World Region

Region

Global

Projected Board Date

Apr 9, 2015

Environmental Category

FI-3 - No Impact

Status

Pending Disbursement

Last Updated Date

May 9, 2025

Department

Equity Portfolio Management

Industry

Financial Markets

Previous Events

Approved : Apr 9, 2015
Signed : Apr 29, 2016

Sector

Finance Companies

Project Description

The proposed project is a USD $250 million risk participation facility whereby IFC will share with MasterCard the settlement risk of emerging market banks arising out of their settlement obligations to MasterCard. The facility, which has a five year term, will contribute to the World Bank Group’s universal financial inclusion goal and create greater financial access by increasing the issuance of prepaid, electronic, debit and credit cards and the number of emerging markets financial institutions that can participate in the global MasterCard network.

The project is a part of IFC’s collaboration with MasterCard to enhance financial inclusion in emerging markets by extending the reach of low cost, cashless financial services to the unbanked and under-banked customer segments. MasterCard has customers in over 200 countries/territories including in 75 IDA/Fragile and Conflict-affected States which offers huge potential for partnership in delivering innovative financial services in areas of common interest such as this project and the Partnership for Financial Inclusion already in place. The Partnership for Financial Inclusion is a joint $37.4 million initiative between the IFC and The MasterCard Foundation to advance financial inclusion in Sub-Saharan Africa by expanding access to microfinance and developing mobile financial services.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	125.0
Loan
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Guarantee	Consumer Loans

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Greater access to finance: the facility will increase access to credit for emerging markets financial intermediaries, individuals and SMEs. The aggregate settlement credit available to financial institutions in a country largely determines the total amount of non-cash transactions possible on payment networks and by increasing the settlement credit, the facility will enable greater access to finance in the country.

Safer transactions and integration with international markets: greater use of electronic payments will make transactions safer, more efficient and inclusive and will enable greater integration in international markets which in turn fuel growth and drive business growth for merchants.

Support enabling environment: the wide range of payment solutions offered by MasterCard would support the development and implementation of credit, debit, prepaid and related payment programs and solutions for consumers and merchants.

Skill transfer: MasterCard establishes and enforces a common set of standards for adherence by its customers for the use of its payments network. Supporting MasterCard''s further expansion into emerging markets will thus result in a transfer of skill and innovation from a sophisticated technology company and payments industry leader to local financial institutions institutions to drive greater acceptance of digital payments, especially at the bottom of the pyramid and lessens the usage of cash.

IFC is uniquely positioned to partner with MasterCard on the Facility. MasterCard has approached IFC in the context of its broader strategic partnership with the Corporation. In addition IFC is one of the few risk counterparties with a AAA rating that is able and willing to share risk in some of the more challenging emerging markets. IFC also brings a unique network of relationships with financial institutions in almost all emerging markets of interest to MasterCard.
IFC will support emerging market financial institutions either to enter the MasterCard network or to receive increased access to the network by enabling MasterCard to accept greater settlement exposure to them. Such institutions are often unable to get the requisite credit support from commercial sources and IFC will be playing a strong complementary role to the market through its risk participation facility.

E&S Category Rationale / Risks and Mitigation

This project involves a risk share transaction whereby IFC shares with MasterCard a pre-specified “settlement risk” exposure of pre-approved MasterCard customers in emerging markets. Pursuant to the risk share transaction, IFC will provide an unfunded guarantee to MasterCard for 50% of losses incurred from the failure of approved FIs to honor their settlement obligations. The total transaction size is proposed to be US$250 million with IFC taking a potential total exposure of up to US$125 million. This transaction is considered to be low risk from the E&S perspective as the underlying transactions are of a very short term, non-investment character, limited size and provided directly to individuals to whom the FIs have issued MasterCard-brand payment cards. MasterCard, as part of its underwriting policy, assesses all potential customers from AML and reputational risk perspective. It also defines eligible and ineligible activities that could be financed with the use of the MasterCard platform. Labor and working conditions of MasterCard are in line with requirements of the Performance Standard 2 on Labor and Working Conditions. Taking all these factors into consideration, IFC categorized this project as FI-3 with no E&S requirements.

Contacts

For Inquiries About the Project, Contact

Dena Devaney, European Treasurer
Email: mailto:dena_devaney@mastercard.com
Phone: +32 2 352 5087

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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