Mastercard has teamed up with American denim company Levi Strauss & Co., Denver-based VF Corporation and the UK’s Marks & Spencer. Mastercard is also collaborating with 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.
Through this new system, participating factories will be able to deposit wages directly into workers’ account, who can then set up their debit card or prepaid card, or digital wallets. Mastercard and its partner are currently coordinating pilots for the schemePilots for the scheme are currently being organized by Mastercard and its partner in Egypt and Cambodia.
The initiative aims to improve conditions for garment workers, who are not only at risk of theft when paid in cash, but they also have to travel long distances to pay bills.
On top of this, workers tend to spend all their salaries without saving a cent on the plans of their future when paid in cash. According to Mastercard, adopting digital payments increases factory workers’ access to savings from 28 percent to 43 percent.
“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 this initiative will be of exceptional help for women, who account for 68% of all garment workers and are particularly financially vulnerable. Mastercard further highlighted a recent study from the International Growth Centre, which found that 75% of female garment workers do not have basic financial literacy.
Mastercard is also working to make the situation of female garment workers by providing them with necessary financial training. The Mastercard Center for Inclusive Growth is also collaborating with BSR to roll out the latter’s HER finance Digital Wages education program.