Mastercard joins forces with major apparel companies to pilot digital payments for garment factory workers
today Oct 1, 2019
Mastercard has teamed up with American denim company Levi Strauss & Co., Denver-based VF Corporation and the UK's Marks & Spencer, as well as global non-profit Business for Social Responsibility (BSR), to trial a new hybrid digital payment scheme for garment factory workers in the apparel companies’ supply chains, seeking to improve security, efficiency and transparency.
Pilots for the scheme are currently being coordinated by Mastercard and its partners in Egypt and Cambodia. Through the new system, participating factories will be able to deposit wages directly into the accounts of its workers, who can then set up debit or prepaid cards, or digital wallets.
The initiative aims to improve conditions for garment workers, who are not only at risk from theft when paid in cash, but also often have to travel long distances to pay bills.
On top of this, many of these workers have little possibility to save money and plan for the future when paid in cash. According to Mastercard, adopting digital payments increases factory workers’ access to savings from 28% to 43 percent%.
The shift should also benefit the employers involved, resulting in an increase in efficiency. As evidence for this, Mastercard claims that garment factories paying their employees digitally report a 53% saving in staff time among the teams responsible for counting and delivering wages.
“Mastercard is an excellent partner for a pilot program like this, due to the infrastructure they have built around digital payment systems coupled with our longstanding commitment to the well-being of workers,” said Michael Kobori, VP of sustainability at Levi Strauss & Co. in a release. “We look forward to seeing the outcomes of the pilot and hope this advances efforts to realize the potential of digital payments to benefit workers across apparel supply chains.”
It is thought that the initiative will be of especial help to women, who account for 68% of all garment workers and are particularly financially vulnerable. Mastercard further highlighted a recent study from the International Growth Center, which found that 75% of female garment workers currently lack basic financial literacy.
With this in mind, The Mastercard Center for Inclusive Growth is also collaborating with BSR to roll out the latter’s HERfinance Digital Wages education program, which seeks to empower female garment factory workers by providing them with basic financial training.
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