Mastercard and its partners are coordinating pilots in Egypt and Cambodia

Mastercard and its partners are coordinating pilots in Egypt and Cambodia

Levi Strauss & Co, Marks & Spencer, and VF Corporation have partnered with Mastercard on a global effort to pay garment factory workers digitally with the group coordinating pilots in Egypt and Cambodia.

Working in conjunction with global nonprofit Business for Social Responsibility (BSR), the programme aims to improve the wellbeing of factory workers who currently lack access to the financial tools and services that can help them and their families thrive, Mastercard, a technology company in the global payments industry, says.

Mastercard and its partners are coordinating pilots in Egypt and Cambodia with a hybrid digital payment solution. Participating factories will have the opportunity to deposit wages directly into workers' accounts. Workers can then activate debit or prepaid cards – or digital wallets – through which they can pay bills or send money directly to family and friends. 

The announcement comes as the industry is moving away from traditional cash payroll to ensure workers receive their hard-earned wages securely and consistently. 

"Around the globe, 230 million adults – nearly 85% of adults in low-income countries — who work in the private sector receive their wages in cash. But getting paid in cash creates significant challenges for both employees and factory owners," Mastercard, a technology company in the global payments industry, says. "Not only are workers at risk for theft, but they also have limited ability to save and often have to take days off to travel miles to pay household bills."

By partnering with companies that use labour-intensive supply chains, including garment manufacturing, Mastercard aims to create digital solutions and deliver training support to give workers more control and transparency over their earnings and savings. The programme also has the potential to specifically benefit women, who make up 68% of the garment worker industry, yet are often "the most financially vulnerable."

"At Mastercard, our vision is to ultimately build a new ecosystem of partners – garment industry, technology, not-for-profit organisations, factories, banks – that work together to deliver social impact at scale. It's an important step in helping workers feel safer, be more resilient and more financially independent," explains Sue Kelsey, executive vice president, prepaid solutions, at Mastercard. "We're committed to help digitise wages throughout supply chains across industries and continents, turning access into usage and in turn, fueling growth of local economies."

In an age where there is increasing importance placed on sustainable practices and worker well-being, digital payroll can also create cost savings, increased efficiency and greater transparency for companies. Garment factories that shift to digital payroll, for instance, experience a 53% percent saving in staff time for the teams that count and disburse wages, according to data collected through BSR's HERfinance programmes. While moving to digital payments increases access to savings accounts for factory workers from 28% to 43%.

"We look forward to seeing the outcomes of the pilot and hope this advances efforts to realise the potential of digital payments to benefit workers across apparel supply chains" - Michael Kobori, vice president of sustainability for Levi Strauss & Co

"Mastercard is an excellent partner for a pilot programme like this, due to the infrastructure they have built around digital payment systems coupled with our longstanding commitment to the well-being of workers," says Michael Kobori, vice president of sustainability for Levi Strauss & Co. "We look forward to seeing the outcomes of the pilot and hope this advances efforts to realise the potential of digital payments to benefit workers across apparel supply chains."

Lydia Hopton, global ethical trade manager for British retailer Marks & Spencer (M&S), concurs.

"As the UK's biggest clothing retailer, we recognise the importance of collaborating with others in the industry to create momentum and change. "Paying people, particularly women, through a digital solution creates economic opportunities for them and their families, and it's a project we're proud to be working with Mastercard and other global brands on. Together, we can create sustainable change to improve people's lives worldwide."

The first step in maximising the benefits of digital payroll for women is ensuring the garment workers' needs remain at the forefront of product development, Mastercard says.

But while access to tools is a key component, as is usage, research has found that 75% of women garment workers do not have basic financial literacy, according to a report published by the International Growth Centre (IGC).

A collaboration between The Mastercard Center for Inclusive Growth and BSR, the global nonprofit that works with businesses to integrate sustainability into their strategy and operations, supports the digital payroll initiative through BSR's grassroots HERfinance Digital Wages education programme. HERfinance is one pillar of HERproject, a workplace-based women's empowerment programme.

"Digitising wages is an area where companies can make relatively small investments and have huge positive impacts, especially for low-income women workers," says Christine Svarer, director of HERproject. "But to realise these positive impacts, it is vital to ensure that workers have the skills and knowledge to benefit from the transition and that factories are supported during the process. We are delighted to be partnering with The Mastercard Center for Inclusive Growth and leveraging our experience in this space to make digital wages a success story."