The International Finance Corporation has launched a risk-sharing initiative providing up to $700 million in guarantees to help financial institutions expand digital payment infrastructure and services across emerging markets.
The initiative is designed to address financial constraints that can prevent banks, fintech companies and other financial institutions from participating fully in global payment ecosystems.
IFC, the private sector arm of the World Bank Group, will cover a portion of the credit settlement risk faced by participating institutions, providing additional capacity for them to expand digital payment services.
The programme is expected to support consumers and small businesses, including women entrepreneurs and people currently outside the formal financial system.
From a project and programme perspective, the initiative represents a large-scale financial mechanism intended to unlock a wider portfolio of digital transformation projects across multiple emerging markets rather than financing individual payment infrastructure projects directly.
Guarantees expected to support $280bn increase in payments
IFC estimates that financial institutions participating in the initiative could generate approximately $280 billion in additional digital payments.
It also expects the programme to result in 360 million additional cards being issued and the number of active users increasing by 90 million, including 39 million women.
The scale of those targets will require participating institutions to expand the systems and operational capacity supporting digital payments, potentially encompassing technology infrastructure, customer onboarding, merchant networks and associated financial services.
IFC said financial requirements currently restrict some institutions’ ability to participate in global payment ecosystems, particularly in emerging markets.
The risk-sharing structure is intended to reduce that constraint by covering part of the credit settlement exposure, allowing participating organisations to increase their digital payment activities.
Programme targets financial inclusion and small businesses
The initiative also forms part of wider efforts to increase participation in formal financial systems.
In markets where cash remains prevalent, expanding payment infrastructure can give small businesses access to a larger customer base while creating digital transaction records and connections to formal financial services.
“Expanding digital payments in emerging markets is one of the most powerful tools to create jobs and bring people into the formal economy,” said IFC Managing Director Makhtar Diop.
“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.”
Diop said financial requirements were preventing some banks and fintech businesses from expanding their payment services despite demand.
“This initiative changes that, helping businesses expand, create jobs, and bring digital payment services to those who have been left behind,” he added.
Beyond increasing transaction volumes, IFC expects the initiative to increase competition between payment providers and improve the accessibility and quality of services.
For financial institutions participating in the programme, implementation will involve more than access to guarantees. Delivering the projected expansion will require the coordinated scaling of technology, operational processes and customer services across potentially millions of new users.
With targets extending to hundreds of millions of additional cards and $280 billion of additional transactions, the initiative creates a substantial programme of digital financial infrastructure expansion across the emerging markets in which participating institutions operate.
