Ann Cairns on the growth of credit card use in emerging economies | Mastercard | Video

Transcript

The growth of credit card use in emerging economies signals continuing development of these markets. But how can we understand what different countries need when it comes to financial inclusion? Ann Cairns, President of International Markets for Mastercard, sheds some light on the subject.

World Finance: Well Ann, obviously Mastercard is growing five times faster in emerging economies as it is in the United States. So what does this mean for emerging economies in terms of spending patterns and also development?

Ann Cairns: Well, obviously there’s a big secular shift that’s going on from cash into electronic payments, and that’s why you’re seeing some of these growth rates in some of the countries in the world. Sometimes governments are driving that shift, and they see that it’s very good for their economy to reduce the amount of cash, because not only does it save them money, sometimes up to 1.5 percent of their GDP, but it also increases transparency, and it really allows commerce to flow.

World Finance: Why is financial inclusion so important for emerging economies, and in turn the world economy?

There are actually 2.5bn on the planet today who don’t have access to any type of financial products

Ann Cairns: There are actually 2.5bn on the planet today who don’t have access to any type of financial products, and interestingly there’s something like 93m people in Europe, and if you’re actually excluded from the financial system, how do you do things that we would expect to do in everyday life? Particularly in places like Europe, where you might want to buy something on the internet, you may want to buy an aeroplane ticket, or a train ticket, and all of these things start to happen electronically now, so if you don’t have access to that it has a big impact on your life.

World Finance: Well we will talk about emerging economies, but just staying with Europe for the time being, and how are you addressing financial inclusion in this area?

Ann Cairns: One of the best examples is actually Italy, because 20 percent of the population who could have bank accounts don’t have bank accounts in Italy. And what the Italian banks have done, they’ve got together and created a pre-environment where they’ve put actually account numbers on pre-paid cards, and you can spend on the card, you can receive money on the card, and so they’ve created effectively a light bank account which really helps population.

World Finance: So now what markets are Mastercard focusing on in terms of credit cards and why are you choosing these markets?

We’re in over 210 countries and territories, so we’re pretty much focused on the whole world

Ann Cairns: Well we’re actually in over 210 countries and territories, so we’re pretty much focused on the whole world, but we look at some countries that are going through major change cycles, such as for example India, that’s rolling out its national identity program, Nigeria that’s doing a similar thing, countries like Mexico where you have a lot of different companies now trying to reach the small business providers, countries like Brazil where you are starting to see a revolution going, from card to telephone payments, and we work in all of these areas with partners on the ground to just try and reach the consumer in any way that works for them.

World Finance: So how do you approach the different markets, do you have a one size fits all approach?

Ann Cairns: We definitely couldn’t do a one size fits all philosophy because obviously there are big cultural differences, there are big timeline differences between where a country is and its development. I think, though, you could say that a tremendous amount of people have mobile phones now, and so the level of mobile phone readiness is high practically everywhere in the world, and that’s why we’re not just working with one or two mobile operators, we’re working with them across the whole world. So people like DoCoMo in Japan, Telefonica in Latin America, Deutsche Telekom, and Weve here in the UK, because what we’re trying to do is keep pace with what the market is demanding in the various countries.

So, for example, here in the UK you’re seeing things like, you can get on buses now, London transport, and just tap with your card. You’ll be able to do that with your telephone, because near-field communication is being rolled out here. In some of the more emerging economies, you’ll probably see mobile phone be used much more often than point-of-sale machines because the infrastructure isn’t there in the first place, so those economies can actually leapfrog and go to mobile more quickly.

World Finance: Is it more difficult then in emerging economies, because obviously they need to catch up in terms of financial inclusion, but then you’ve also got the rate that technology is advancing, so does that cause problems?

I think that the rate the technology is advancing actually helps the situation

Ann Cairns: No, I think that the rate the technology is advancing actually helps the situation, because when we start to roll out capability in Africa, there weren’t the landline infrastructures that we would have piggybacked off in previous geographies, so we started to roll out satellite technology to actually hook up to our global network. So these things actually advance what’s happening.

World Finance: Well how do you approach countries such as China, for example, where companies might have the monopoly in that country? Obviously China has UnionPay.

Ann Cairns: We’ve been working with UnionPay for a number of years, if you were in China you would see actually cards that are co-branded Mastercard and China UnionPay, and what happens is the Chinese cardholders can use our network when they’re travelling and UnionPay network isn’t available to them. So we actually have quite a good coexistence on the cross-border side. Obviously we’re very keen to do more things domestically in China and were thrilled that the Chinese have actually agreed with the World Trade Organisation that they will open up to foreign companies to play in the local arena, but we’re just not sure exactly when that’s going to happen.

World Finance: Ann, thank you.

Ann Cairns: Thank you very much.