IFC mobilises $700 million in risk guarantees with Visa and Mastercard for digital payments in emerging markets
IFC mobilises $700 million in risk guarantees with Visa and Mastercard for digital payments in emerging markets #
The International Finance Corporation (IFC), the private-sector arm of the World Bank Group, announced risk-sharing agreements with Visa and Mastercard on September 9, providing combined guarantee capacity of roughly $700 million to support digital payment expansion in emerging markets.
Both agreements address the same barrier: financial institutions in developing markets often lack the balance-sheet depth required to meet settlement obligations for membership in global card networks, leaving consumers and small businesses reliant on cash. Under both structures, IFC absorbs a portion of the credit settlement risk on behalf of enrolled institutions.
The Visa agreement provides IFC up to $200 million in risk-sharing support over five years. It initially targets 14 countries in Latin America and the Caribbean and is expected to cover roughly 50 financial institutions with below-investment-grade credit ratings. Paul Fabara, Visa’s chief risk and client services officer, described it as a “first-of-its-kind partnership” that would allow the company to bring secure payment solutions to underserved consumers and small businesses in the region.
The Mastercard agreement is structured as a $500 million Settlement Exposure Facility using a settlement risk guarantee model intended to scale participation in global payment systems. The initial focus is on emerging markets in Europe and Latin America. Jon Huntsman, Mastercard’s vice chairman and president of strategic growth, said the initiative responds to the gap between those connected to the digital economy and those excluded from it. Mastercard said the facility is designed to give financial institutions cost-effective access to modern payment infrastructure while maintaining sound risk management.
IFC Managing Director Makhtar Diop pointed to the economic effects of expanding merchant access to digital payments. “When a small business owner or woman entrepreneur accepts a card payment, it opens the door to more customers, more revenue, and a foothold in the digital economy,” he said, according to Securities.io’s reporting on the announcement.
Mastercard and IFC have an existing relationship in this area: the two organizations first established a global risk-sharing facility in 2015 and revised it in 2018 to expand coverage and increase IFC’s share of underwritten settlement risk. The new $500 million facility builds on that model. The Visa agreement is the first time IFC and Visa have formalized this type of credit-risk-sharing structure.
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