The Inter-American Development Bank (IDB), a multilateral financial institution that promotes economic development in Latin America and the Caribbean, recently partnered with US-based Common Cents Lab, US-based financial services company Mastercard and Argentina-based e-retailer MercadoLibre on a program intended to improve the ability of entrepreneurs as well as small and medium-sized enterprises (SMEs) “to prepare for, deal with and recover later from economic shocks.” Over two years, the partners will design and test “behavioral-informed interventions,” such as reminders, deadlines or social pressure, “within the MercadoLibre platform and study its impact on profits, short- and long-term savings, or the use of credit products among its sellers.” The program will debut in Mexico and is slated to expand over time into other countries that MercadoLibre serves.
The role of Mastercard in the program is to support the Common Cents Lab team through the Mastercard Center for Inclusive Growth. Common Cents Lab co-founder Mariel Beasley stated, “We are excited to launch this new initiative with the Mastercard Center for Inclusive Growth and our partners in the region as a way to measurably help those affected by the pandemic recover and better prepare for future financial emergencies.”
The IDB Retirement Savings Laboratory, which IDB launched in 2017 to increase the retirement savings of people in Latin America and the Caribbean, will perform research on the implementation of the project.
Founded in 1999, MercadoLibre is a platform facilitating online sales and payments in 18 countries in Latin America and the Caribbean. The firm reported gross revenue of USD 4.0 billion during 2020. As of the first quarter of 2021, MercadoLibre had 70 million active users.
Common Cents Lab is an initiative of the Center for Advanced Hindsight, a US-based NGO that researches behavioral science. The Common Cents Lab aims to find solutions that improve the financial stability of low- and moderate-income individuals in the US and other countries. In particular, it aims to help people decrease expenses, improve management of their cash flow and debt, and increase their earnings and savings.
Headquartered in the US state of New York, Mastercard is a payments and technology company connecting consumers, financial institutions, merchants and governments in approximately 210 countries and territories. As of October 2020, the firm reported net quarterly income of USD 1.5 billion on total assets of USD 32 billion.
Established in 1958, IDB promotes “environmentally friendly” economic development via improved health, education and infrastructure in Latin America and the Caribbean. During 2020, IDB reports having issued USD 14 billion in loans and grants, ending the year with assets of USD 152 billion. The institution is headquartered in the US city of Washington.
The IDB Group comprises IDB; the Inter-American Investment Corporation, which uses the trade name IDB Invest; and the Multilateral Investment Fund, which uses the trade name IDB Lab. IDB Invest is active in agriculture, financial inclusion, sustainable energy and transportation. As of June 2020, it had USD 13 billion in assets under management, deployed via 385 clients in 25 countries. Established in 1993, IDB Lab is an “innovation lab” that tests models for facilitating inclusive growth. During the third quarter of 2020, IDB Lab approved 16 projects with a total value of USD 9.5 million.
By Harriet Ritchie, Research Associate
Sources and Additional Resources
IDB press release
https://www.iadb.org/en/news/new-program-seeks-improve-financial-resilience-entrepreneurs-and-workers
MercadoLibre homepage
https://www.mercadolibre.com/
MercadoLibre 2021 financial presentation
https://investor.mercadolibre.com/static-files/5474fbe7-c335-4611-ad31-6129c624ccc2
Common Cents Lab webpage
https://advanced-hindsight.com/commoncents-lab/
Mastercard homepage
https://www.mastercard.us/
Mastercard Center for Inclusive Growth homepage
https://www.mastercardcenter.org/
IDB Retirement Savings Laboratory webpage
https://www.iadb.org/en/labor-and-pensions/home-retirement-savings-laboratory
IDB 2020 annual report
https://publications.iadb.org/publications/english/document/Inter-American-Development-Bank-Annual-Report-2020-The-Year-in-Review.pdf
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