MIT SLOAN: MasterCard Pins Down the Cash Economy
To limit theft and corruption, MasterCard helps governments switch subsidy payments to electronic currency.
For many at the base of the economic pyramid in the developing world, the only dependable source of support is through government food and health subsidies. In rural communities, these are usually delivered by hand in the form of vouchers, checks or cash. The problems in this set-up are fairly obvious: it opens the economy to corruption, crime and abuse in the way only bundles of cash can, and it’s not unusual to see situations in which impoverished people line up for days, only to find the cash has run out when their turn comes. In good times, this places an added burden of inconvenience and indignity on poor families; in bad times, it can spell disaster for society’s most desperate members, particularly young children and the elderly.