Visa, IFC Launch $200m Risk-Sharing Facility for Emerging Markets

By Adedapo Adesanya

Global payments giant, Visa, and the International Finance Corporation (IFC), a member of the World Bank Group, have partnered on a risk-sharing initiative to expand access to digital financial services in emerging markets.

Under the agreement, IFC will share credit settlement risk for Visa transactions involving participating financial institutions, allowing more institutions to provide digital payment services to underbanked consumers and small businesses.

According to a statement on Wednesday, the initiative is expected to support about $200 million in risk sharing over five years, initially covering 14 countries in Latin America and the Caribbean.

It will also target about 50 financial institutions with below-investment-grade ratings, according to the companies.

Visa and IFC said the partnership would help financial institutions extend digital payment services to millions of consumers and small businesses, enabling them to participate more actively in the formal economy.

Visa’s Chief Risk and Client Services Officer, Mr Paul Fabara, said the partnership would help financial institutions provide secure and reliable payment solutions to more people and businesses in emerging markets.

“Through this first-of-its-kind partnership with IFC, Visa will help financial institutions bring secure and reliable payment solutions to more people and small businesses in emerging markets. Together, we can expand financial inclusion and help more communities participate in and benefit from the global economy,” he said.

IFC Vice President of Products and Clients, Mr Mohamed Gouled, said the initiative would ease constraints limiting financial institutions’ participation in digital payment systems and help small businesses and entrepreneurs reach new customers, expand operations and create jobs.

“By reducing constraints that limit the participation of financial institutions, we are enabling greater access to digital payment solutions for small businesses and entrepreneurs across emerging markets. This will help them reach new customers, scale their operations, and create jobs,” he noted.

The organisations said greater access to digital financial services could improve the speed, security and transparency of transactions while providing consumers and businesses with more opportunities to participate in the global economy.