Business & Economy

Panama teams up with Mastercard to digitize gov’t, foster financial inclusion

Miami, Apr 29 (EFE) – An agreement between the Panamanian government and multinational payments company Mastercard aims over the next five years to digitize state payments, fight cyber fraud and expand financial inclusion in a response to problems that have been exacerbated by the Covid-19 pandemic.

Panama is the first country in Latin America and the Caribbean to join Mastercard’s Digital Country Partnership, which focuses on digital security, infrastructure, education, regulation and inclusive financial growth, according to Darren Ware, the company’s vice president for government engagement in the region.

The idea behind the agreement, signed last week by Panamanian President Laurentino Cortizo’s administration, is to create a digital ecosystem capable of addressing the latest technological challenges and improving public services for citizens.

Ware said that Mastercard and the Panamanian government hope to reach people without a bank account – the “most vulnerable” during the pandemic – and recipients of government benefits.

“We are working with the national government’s financial institutions to try to reach those people, to include more people in the financial system using digital payments or a prepaid card,” he explained.

Ware noted that a “very high” number of people in Latin America are not part of the banking system.

While 73 percent of adults in upper-middle-income have bank accounts, the average across Latin America and the Caribbean is 55 percent and in Panama it is 46 percent, the 2017 Global Findex study showed.

“Every government has the challenge of reaching the people in the country who are unbanked,” Ware said.

He said that just as individuals were forced into digital payments by Covid-19, governments such as Panama’s are eager to digitize benefit payments and tax collection.

“They certainly want to move away from cash as much as we do,” the Mastercard executive said.

The big challenge for Panama and the region in the project for digital transformation is “coordination” among the government, citizens and businesses.

“It only solves half the battle” if someone receives government benefits in the form of a prepaid card but can find no merchants willing to accept them, Ware said.

“There has to be coordination on all sides of the equation to maximize the benefit and really have a balanced approach,” he said.

Over the last year, Ware said, “the most resilient companies have been those that are able to accept digital payments, have an online presence and participate in online commerce.”

Mastercard will make its Digital Allies platform available to firms of all sizes, including the agricultural and industrial sectors, and implement a financial education plan to ensure greater acceptance of digital payments, even in remote and hard-to-reach areas.

Ware said that the Panamanian government has its own digital coordination strategy “to connect the different national ministries and national financial institutions so that they all work together.”

“That’s why I think they were also interested in working with us,” he said.

“Governments can’t do it all by themselves. We can’t do it all by ourselves. We have to work together to develop the solutions that the government needs for all the people or for small and medium-sized businesses,” the Mastercard executive said.

As part of the Digital Country Partnership, the company will work with Panama’s Government Innovation Authority (AIG) as it pursues the simplification, standardization and modernization of processes, using tools such as the Mastercard ID Digital personal identification service.

Much of the agreement is “focused on cyber security, digital security, transaction security, all the different parts, plus we have an educational component,” Ware said.

Related Articles

Back to top button