Empowering people of all ages to make smarter financial decisionsAugust 27, 2020 | By Karsten Strauss
Globally, there are roughly 1.7 billion people who are unbanked — that means they operate almost exclusively in cash and don’t take advantage of financial institutions. These people often have a hard time providing for their families and building growing businesses. The COVID-19 pandemic has exacerbated the divide between the banked and the unbanked. Those outside the financial system have struggled to receive financial aid for themselves and their businesses.
Making the jump across the financial divide isn't easy, but one element that can help propel that launch is financial education. The more people understand about different aspects of finance, the further they can make their money go. For the past nine years, Mastercard has been working to help people of all ages to boost financial education through Master Your Card; a free public initiative that helps people, small businesses and governments better understand pre-paid, debit and credit cards and empowers them to make smarter financial decisions.
Master Your Card’s initiatives typically start with the young, says Mercedes Garcia, vice president of community relations at Mastercard. In 2015 it partnered with the World of Money Institute, a New York-based nonprofit that provides financial education to children from financially-underserved communities. By 2020, Master Your Card had reached around 40,000 students in public schools through an ongoing program Everfi, a leading U.S. education-technology company. “If you don't learn these things when you're young,” Garcia says, “it has a big impact on your life in the future.”
The program also serves adults, focusing on unbanked and underbanked black and Hispanic communities, by partnering with organizations like the League of United Latin American Citizens (LULAC), the Congressional Hispanic Caucus Institute, the A. Philip Randolph Institute, Operation HOPE, the Hispanic Heritage Foundation and the YWCA, among others.
Since its inception, Master Your Card has held financial education workshops in more than 40 cities across the U.S. and various cities in Europe and Asia. Garcia is now working to scale the initiative by expanding its digital delivery and bringing Mastercard volunteers to serve as Master Your Card “Allies in Financial Equity.”
The first challenge is overcoming people’s misconceptions. For instance, Garcia says, many people believe that all payment cards are credit cards. Therefore, unbanked individuals, as well as those without a credit history, discard the possibility of using a payment card and end up relying on cash, which comes with associated risk and costly fees. Master Your Card’s curriculum outlines the pros and cons of all payment cards — credit, debit and prepaid — as different alternatives for different situations.
The program has also coached small business owners to help them understand the benefits of accepting payment cards to maximize their sales power as well as all the added benefits of leveraging electronic payments technology.
Many small business owners worry that accepting payment cards is complicated and can weigh them down with debilitating costs, Garcia says, but the curriculum illustrates the benefits of accepting payment cards and how it can help them grow while catering to consumers who are looking to lessen their reliance on cash and gaining the convenience and safety of using available technology such as contactless payments.
Those who learn from the Master Your Card curriculum are never offered Mastercard products, Garcia stresses— the initiative is simply a service based on the notion that financially educated individuals, families and businesses are an overall boon to the larger economy. “Learning about financial technology affects people in a very positive way,” she explains. “Not only because of the savings of time and money, the convenience and safety; but also learning that there are more than just credit cards.”