Published: August 27, 2020 | Updated: February 22, 2024
Read time: 5 minutes
Let us imagine we are in 2021, and the world has left behind the worst of Covid-19. No doubt, life has changed, and governments, companies and individuals are adapting to a “new normal.”
Our Chronicles series will help readers understand what is likely to be different in a post-Covid-19 world. We will also look at how players in the payments ecosystem are already adapting today to successfully emerge from this unprecedented shock to the economy and our daily lives.
This week we are focusing on using data to support governments in tackling Covid-19 challenges. These are certainly strange and challenging times for governments and public institutions, and we strongly believe data insights can play a tremendous role in supporting them as they grapple with the economic, societal and health implications of Covid-19.
Governments around the world are a core stakeholder for payment companies – as regulators, as partners and as customers. We strive to address their challenges and the opportunities being created by technology development through Covid-19 and beyond.
Our hypothesis is that data-driven insights and analytics can help governments identify key trends and learn from them, as well as support decision-making and improve forecasting capabilities needed now and beyond the pandemic.
Covid-19 Challenges for Governments
For at least a decade, governments have been working on modernizing their economies through initiatives such as eGovernment services, digital ID, financial inclusion, small and medium-sized enterprises (SME) support (acceptance, e-commerce, lending), education (cheaper, better, widely available), economic diversification (from resource-based economics to capital-light and high-capability knowledge economies).
Success has varied across these and other development themes with delays, excess and limited accountability thanks to general economic growth (and access to credit).
Given Covid-19's impact, governments are forced to accelerate progress along these themes for practical (health) and economic reasons, including offsetting the shortfall in growth coming from the economic crisis caused by the pandemic.
"Combined with increasing citizen expectations, governments will be required to deliver more with less. Thankfully, today’s data and technology can help governments own this challenge. "
Public-private partnerships that tap into digital innovation and data insights can support governments with their efforts to combat these outcomes. While no one has a crystal ball for the next two weeks or two months, we are tracking developments in four stages: containment, stabilization, normalization and growth (COSNOG). Economic sectors, countries and regions are all at different stages of progress in our COSNOG framework.
Mastercard has been working closely with governments at each of these stages. We are helping them to provide vital financial support to citizens and businesses and build donation platforms. We are providing data analytics and insights to help rebuild tourism and small business resilience and working to strengthen the digital infrastructures that will be more critical to future economic growth. In total, Mastercard has identified 340 potential initiatives to support governments across the world, and already has 103 initiatives live in 74 markets as of August 2020.
The Promise of Strong Data
Strong data capabilities are important to navigate shifts in consumer behavior and habits, as well as market volatility.
The past is no longer a reliable guide for future performance, and capabilities should be expanded to capture diverse data assets and avoid blind spots. Novel datasets and analytical tools can provide rich insights for businesses and governments enhancing their operational efficiency. Tracking and analyzing data in real time will be a key enabler for public institutions to respond quickly to threats and unpredictable trends.
We are partnering with the public sector and across industries to help businesses and their customers get through this crisis, utilizing anonymized and aggregated transaction data. We can detect changes in consumer behavior almost in real time. This enables our partners to draw conclusions, make data-driven policy decisions and develop a range of products and services in a timely manner.
Understanding Everyday Spending
Understanding citizens’ daily spending behavior is also crucial to monitor signs of recovery. Cities, states and national governments seeking to monitor and ultimately rebound from the crisis have made use of Mastercard Recovery Insights, a set of sophisticated tools available to governments that offer insight into the twists and turns of an economy in crisis.
For example, New York City wanted to understand wild fluctuations in retail spending when the city shut down. Mastercard is providing near real-time actionable insights to New York City leaders to help them analyze and estimate tax revenue to inform budget planning and other critical information during a dynamic and fluid time.
Assessing Impact on Tourism
The near-complete lockdown in response to the pandemic led to a 98% drop in international tourist numbers in May compared to 2019, according to the United Nations World Tourism Organization Barometer. Tourist arrivals between January and May dropped 56%, translating to a decrease of 300 million tourists and US$320 billion lost in international tourism receipts – more than three times the loss during the global economic crisis of 2009.
As an example of how data can help improve public institutions’ decision making, we recently launched the barometer in Parisian tourism along with the Office of Tourism and Congress of Paris. Five indicators provided a real-time view of tourists’ interest in visiting the capital, with data on both the air traffic and the media impact of Paris around the world.
Additionally, insight into consumer spending trends is helping the Czech government rebuild its tourism industry, which has seen as much as an 80% reduction in consumer spending since international borders closed. Covid-19 restrictions put 80,000 to 180,000 tourism jobs at risk.
Before the crisis, a report revealed that tourists almost exclusively spent money in city centers. This allowed the government to fine tune its marketing to steer visitors toward the countryside, driving tourism spending to economically overlooked areas. As Czech citizens return to work and tourism restarts, the government can continue to fine tune its marketing with help from Mastercard’s Tourism Insights Platform.
Supporting Small Businesses' Recovery
Small businesses will also be a cornerstone for economic recovery, and in order to support their recovery, we partnered with various stakeholders in financial disbursement.
For instance, the Turkish government mobilized the Credit Guarantee Fund to provide small and medium-sized enterprises (SME) US$3.3 billion to support 1.1 million SMEs across the country.
The primary goal was to quickly disburse loans to SMEs. Based on this need, we worked with our partner banks on a commercial card solution. The initial goal for this portfolio of commercial cards was 200,000 SMEs, and partner banks have already issued 650,000 commercial cards.
One of the salient features of commercial cards is the merchant category code (MCC) restriction on transactions for B2B sectors. This solution would enable relevant stakeholders to track spending categories and make sure the cards were only used for B2B transactions. Possible misuse of loans would be prevented while spending would be directed to productive and registered economic fields.
Promoting Financial Inclusion
The World Bank is now estimating that the pandemic will push 71-100 million people into extreme poverty. As the global economy evolves, countries should seize this opportunity to rebuild public services and systems that are financially accessible to everyone.
Digital payment systems are working with governments to help affected individuals get back on their feet. In Los Angeles, for instance, the LA Mayor’s Fund has used digital platforms to collect over $36 million of donations and distribute aid to over 100,000 Los Angeles residents who have lost their jobs.
In Chile, officials have worked with Caja Los Héroes to quickly disburse funds to over 55,000 pensioners using Mastercard prepaid cards, with the goal to reach 200,000. This has helped the government spur their older beneficiaries away from a reliance on physically collecting cash and allowed them to receive benefits and make purchases from the safety of their own homes.
A Closing Word
Covid-19 has increased the need for timely, accurate and relevant data in public and private sectors. The speed at which the pandemic has impacted lives has forced governments to react quickly. Data and insights spur better policy making, targeted support and forecasting. All of this can be done while respecting consumer data privacy.
Of course, these recommendations are broad, and every challenge and organization are different. For more guidance on how data can support decision making for governments and public institutions, reach out to Fabrizio Burlando or Raul Escribano. Have a question or suggestion for the Chronicles of the New Normal team? Send us a note.
