Claire Thompson, Executive Vice-President, Global Head of Trade, Enterprise Partnerships at Mastercard, outlines the importance of realising a more sustainable future for trade.


Disruption as an awakening

Just over 12 months since the outbreak of Covid-19, virus containment measures continue to change the way we go about our lives. Repercussions across the global supply chain have been extensive, but especially profound for small and medium-sized enterprises (SMEs).

While larger companies typically have access to credit lines, smaller businesses rely on a steady flow of payments from customers to maintain liquidity.

Any disruption to that flow can pose a threat and throughout the last 12 months such disruptions have been far too frequent, leaving many SMEs struggling to stay in business.

Due to economic uncertainty and increased risk, funding was scaled back and SMEs faced significant liquidity challenges, exacerbating the existing US$1.5tn trade finance gap.

While the last 12 months have seen unprecedented challenges, the immense health, societal and economic disruptions have provided an urgent wake-up call.

We have seen not only appetite, but action, from governments, business, academics and entrepreneurs who have all collaborated to address the inequalities exacerbated through the global pandemic. There is a collective realisation that our successes and failures are interconnected; we can only achieve sustainable and inclusive growth if we commit to initiatives that help everyone, everywhere, thrive.

Most recently Mastercard announced a US$600mn Sustainability Bond to fund our work furthering financial inclusion and societal disparity.1 If we are to realise a more inclusive and sustainable digital economy that we can be proud of, we need commitment from public and private sectors to drive both environmental and social impact. The Bond builds on our existing pledge to achieve net zero emissions by 2050 and commitment to bring 1 billion people and 50 million small businesses, with a direct focus on providing 25 million female entrepreneurs with solutions that help them grow their business, into the digital economy by 2025. Such efforts will be bolstered by collective effort and responsive action across our own supply chains.

Over recent months, acceleration has been a key theme across all sectors. For global trade, the digital acceleration witnessed from a regulatory, technological, and political perspective has been significant. Our opportunity now is to continue the momentum and invest in the partnerships and tools that enable trade to move away from siloed systems, paper-based transactions and finance gaps in order to enable a more accessible and inclusive ecosystem.

We have the potential to realise a stronger future for the whole supply chain by focusing on the following three-pillar strategy.


  1. Digitisation

Digital transformation must be inclusive and remove barriers rather than inadvertently create more. Since the pandemic hit, SMEs in particular have needed to get online quickly in order to remain connected to customers and stay in business. Tools such as Mastercard’s Digital Doors support entrepreneurs and small businesses to pivot digitally while offering protection from potential threats and providing relevant insights to make informed choices.2

Technological advancements are helping businesses become more efficient and resilient while paving the way for industry-wide transformation and growth. Last year Mastercard launched a Trade Card pilot programme with DP World in the Dominican Republic to digitise the port ecosystem.3 Ports can be a bottleneck for all businesses that rely on the global supply chain, but SMEs feel that pain much more acutely than big businesses because of their cash-flow needs. Initiatives like the DP World Trade Card not only remove paper from the port system, allowing the ecosystem itself to operate more efficiently, but also provide layers of security through digitised payment flows, which increase trust and allow freight to move from ship to shore more efficiently.

Blockchain brings significant potential to the future of global trade. Working with fresh produce providers, including Australia-based Fresh Supply Co, Mastercard’s blockchain capabilities are enabling the flow of goods to be tracked and linked to payment.4 By providing greater transparency over shipment and delivery, early payment of goods and increased access to financing in the supply chain life cycle is facilitated – allowing both goods and payment to flow more easily.

  1. Financing

Now more than ever liquidity is key, and ensuring that SMEs have fair access to appropriate and approved credit lines is essential to realise resiliency across the supply chain. While tier-one firms typically have greater access to capital, SMEs consistently find it hard to secure.

According to the Asian Development Bank (ADB), SMEs had a borrowing appetite that exceeded available financing by about US$1.5tn in 2018.5 The International Chamber of Commerce forecasts that the gap could be two or three times that size this year, even amid a return to growth.

Last year Mastercard formed a multi-stakeholder alliance with ADB to create technology solutions to drive greater digital efficiency across the retail supply chain in Asia and increase wholesalers’ access to credit. By leveraging supply chain data from N-Frnds, SGeBIZ’s digital procure-2-pay platform and partnering with Finastra and its Trade Bank customers, Mastercard is automating access to working capital finance by increasing the digital data available to assess and evaluate creditworthiness for SMEs.

Technological advancements, from blockchain to open banking, and data insights mean that we now have the tools available to enhance trust across the supply chain and in turn increase lending access for SMEs and lending certainty for financers. Open banking advancements, such as Mastercard’s capabilities with Finicity, can facilitate creation of a “digital credit passport” for SMEs, and as a result, safeguard a greater choice of affordable financial services and ultimately enable enhanced operational models to better support the whole supply chain.

  1. Data insights

In today’s trading landscape, the ability to understand business activity and performance is an operational necessity for organisations of all sizes. Covid-19 emphasised the importance of having comprehensive real-time data, along with the latest technology and analytic tools to leverage it – which takes a collaborative effort.

Research from the ADB highlights that insufficient information in credit applications results in 17% of rejections for credit applications by SMEs.6 A historic reliance on audited financial statements as the basis for credit decisioning excludes SMEs and is no longer enough at a time when we realise that creditworthiness can change drastically in a short time frame.

Mastercard, has a longstanding partnership with Unilever aimed at facilitating better access to credit for micro-entrepreneurs, allowing them to overcome cash constraints that limit business growth. Through the scheme, distribution data is utilised to help banks assess risk and extend new credit lines with sustainable limits, which enables micro-store owners to buy and sell more products. Supported by Mastercard Center for Inclusive Growth, store owners also receive education to ensure that they benefit from financial tools responsibly.

Better access to data allows us to shift away from antiquated scoring models, and dynamic data at a wider variety of data points is changing the way we assess risk for the better. Solutions like open banking provide access to real-time supply chain data, while AI tools provide better insights into the state of a business.

A path towards prosperity for all

To continue the pace of digitisation seen over recent months, there needs to be an ongoing effort to create innovative new lending initiatives that ensure fairer access to finance throughout the whole global supply chain.

Over the last year we’ve seen how critical digital technology is for people to access opportunity. It’s our responsibility to come together as a force for good to realise a more resilient new normal for trade: a future that addresses vulnerabilities and inequalities exacerbated through the global pandemic and one where technology and partnerships are intentionally focused on laying firm foundations that support pathways to prosperity for all.