Mastercard Inc. MA and partners N-Frnds, SGeBIZ and Finastra have entered into an agreement with the Asian Development Bank (ADB) to provide funds for small and medium enterprises (SMEs) in Asia.
SMEs are at the receiving end of the COVID-19-led business disruption, which affected their supply chains and trade networks. These enterprises account for 90% of all global businesses, employing about half of all the workers and delivering more than 50% of GDP.
The drying up of overall demand among the consumers caused a funding gap between the banks and SMEs. Even in the pre-COVID-19 times, the ADB estimated that there was a huge $1.5-trillion fund crunch in 2018 because of major challenges in accessing cheap finance due to asymmetric information problem between suppliers and demanders of funds and high transaction costs.
The International Chamber of Commerce estimates a potential $2-$5 trillion shortfall in trade financing through 2021 if demand returns to the pre-COVID levels in global economy.
For the funding to reach the needy businesses, a seamless disbursal path is required. Mastercard along with its fintech partners via their technology will facilitate fast disbursement of funds from banks to MSMEs like grocery stores, pharmacies, restaurants etc.
To this end, the company developed a collaborative market-leading solution with SGeBIZ, Finastra and N-Frnds to provide integrated digital funding solutions. Mastercard is committed to bring 1 billion individuals and 50 million micro and small businesses within the digital economy periphery.
This leading global payment processor’s technology solution will make inroads into Indonesia with 500 retailers and then go on to tap an estimated 5,000 retailers by the end of first-half 2021. ADB has been working closely with the Government of Indonesia to lessen the impact of the coronavirus pandemic and to this end, approved $1.5 billion financing in April 2020.
Mastercard’s technology solutions will provide twin benefits, such as wholesaler access to credit and fully digitalized marketing campaigns.
Another company in the same space, Visa Inc. V, pledged to support 50 million SMEs worldwide including 10 million in the Asia Pacific zone by introducing a range of solutions that could help SMEs optimize their digital commerce efficiency, and enable them to send and receive digital payments.
Mastercard as a payments technology company has always been at the forefront of providing superior payment services to its customers. The company by virtue of its broad global payment ecosystem,network, up-to-date technology and partnership with fintech players steadily meted out hassle-free service to its customers around the globe.
Year to date, the stock has gained 10.9% compared with its industry’s growth of 4.4%.
Mastercard carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report