Across dozens of countries, tens of millions of small businesses share the same basic profile: a growing customer base, costs that are reasonably well understood, and a real use for a bit more working capital.
What most of them lack is a credit history a bank can read, collateral a loan officer can register, or income documentation that fits a standard underwriting form.
Spread that gap across different currencies, regulators, and banking habits, and it becomes clear why access to credit remains one of the more stubborn problems in global development finance, not because the demand or the repayment capacity is missing, but because the financial system was never built to see it.
This is the gap the Mastercard Foundation has spent nearly two decades trying to close, by strengthening institutions that lend.
Understanding how it moves capital through partners, rather than directly to borrowers, offers a useful model for anyone working in inclusive finance, whether that person runs a fintech lending platform, manages a cooperative, or sits on the credit committee of a regional bank.
Why credit access is still a tough problem to solve
The barriers that keep credit out of reach look remarkably similar across very different economies. Many small businesses operate informally, which means there are no audited statements for a lender to review and no paper trail showing how revenue moves through the year.
Credit bureau coverage varies enormously from one market to the next, so a lender in one country might have rich repayment data to draw on while a lender one border over is working almost entirely from alternative signals like mobile money activity or utility payments.
Seasonal income adds another layer of difficulty, since a borrower whose earnings arrive in one or two large payments a year does not fit comfortably into a monthly repayment schedule designed around salaried employment.
On top of all this, lenders have to manage fraud risk, verify identity in places where formal documentation is inconsistent, and absorb the real cost of reaching customers outside major urban centers.
None of this makes lending impossible. It does mean that reaching underserved borrowers responsibly takes different underwriting logic, different product design, and often a level of institutional capacity that many smaller lenders simply have not had the resources to build on their own.
That is the specific gap that catalytic funders like the Mastercard Foundation have positioned themselves to fill.
What the Mastercard foundation does
The Mastercard Foundation was created in 2006, when Mastercard became a publicly traded company and donated a large block of shares to establish an independently governed charity.
For the first two years, a board appointed by Mastercard oversaw the new foundation, and in 2008 an independent board took over, with Reeta Roy becoming its first president and CEO, working with the new independent board of directors to set the specific direction of The Mastercard Foundation.
That separation matters, because although the foundation shares a name and history with Mastercard the payments company, it sets its own strategy, chooses its own partners, and answers to its own board rather than to Mastercard’s shareholders.
Its endowment has grown substantially in value since that original gift of stock, and it is now counted among the largest charitable foundations in the world, with 2024 assets of $47 billion.
The foundation’s mission centers on advancing education and financial inclusion, with a particular focus on helping young people access dignified work, both across a large number of developing economies and, through a separate program called EleV, among Indigenous communities in Canada.
Crucially, the foundation does not originate loans, run a credit book, or compete with the banks and fintechs already operating in the markets it supports.
It works through grants, technical assistance, and blended finance arrangements delivered via partner institutions, which is what allows it to influence lending far beyond what any single organization could underwrite directly.
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How the foundation deploys credit capital across markets
While individual programs vary by region and sector, the underlying deployment process tends to follow a consistent sequence.
Step 1: Identify where financing is missing.
Before putting money into a market, the foundation and its partners first ask a basic question: who is not getting credit, and why not?
The answer is almost never “there are no lenders here.” It is that the lenders who exist offer products built for a different kind of borrower.
Take a rice or maize farmer in Southeast Asia or a coffee grower in Latin America. Their income comes in one or two lump sums a year, right after harvest.
A bank loan that expects equal monthly payments simply does not match how money moves through their year, so even a farmer who could easily repay a loan on time gets rejected because the repayment structure was designed for a salaried worker.
Or take an online seller who has years of steady digital transaction history through an app or mobile wallet, but no formal payslip and no file at a credit bureau.
On paper they look invisible to a bank, even though their phone has more reliable income data than most traditional loan applications ever collect. This is the kind of gap that companies like Tala and Branch built entire lending models around, using phone and transaction data instead of a credit bureau file to decide who qualifies.
And in many countries, a woman running a profitable shop or trading business may not be allowed to register land or property in her own name, which is often the only collateral a traditional bank accepts. So she gets turned away, not because her business is risky, but because the collateral rules were never built with her in mind.
The point of this step is simple: figure out exactly where the mismatch is before designing anything, instead of guessing because in most markets, the issue is not a total absence of lenders, but a mismatch between existing products and the realities of the people who need credit.
Step 2: Choose financial institution partners with the right foundation to build on
Once the gap is clear, the foundation does not build a new lender from scratch.
It looks for an institution that already has some of what is needed, whether that is a bank, a savings cooperative, a microfinance lender, or a fintech, and checks whether that institution is well run, financially healthy, experienced with the target customers, and genuinely interested in lending responsibly rather than just growing fast.
Selection usually depends on how well the institution is managed, its financial stability, its experience serving the target customers, and whether its leadership is committed to responsible lending instead of chasing fast growth.
The foundation also looks at whether the institution is ready to make good use of new funding and technical support, or if it first needs more time to strengthen its capacity.
Step 3: Provide catalytic funding that solves specific lending challenges.
The funding is not simply added to an institution’s general budget. Instead, it is targeted at removing a clearly identified barrier to lending.
For example, a bank in South Asia might receive funding to build a digital loan application system, while a cooperative in East Africa could be supported in designing repayment schedules that align with farming seasons instead of fixed monthly calendars.
This support often comes as grants that help institutions develop new products, expand into underserved markets, or upgrade their technology. In some cases, it is combined with commercial investment through blended finance, where philanthropic capital helps reduce the risk for private investors.
The goal is not just to provide more money, but to remove the specific obstacles preventing lenders from serving more people effectively.
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Step 4: Strengthen the institution, not just its finances.
Providing funding is only part of the solution. If a lender’s systems, staff, and processes cannot support a larger or more diverse group of borrowers, additional capital will have little long-term impact. This is why the Mastercard Foundation also invests in building institutional capacity.
Support often includes training loan officers to assess non-traditional sources of income, improving credit policies and risk management practices, developing new financial products, and helping lenders adopt digital tools.
Many institutions also receive support to implement digital identity verification, automated underwriting, and mobile repayment systems, making it easier to reach underserved customers while reducing paperwork, operational costs, and the need for borrowers to visit physical branches.
Step 5: Let local lenders lead the relationship with borrowers.
Once the funding and capacity-building work is complete, the actual lending is handled entirely by the local financial institution.
The foundation does not appear on the loan agreement or manage the lending process. Borrowers apply, are assessed, receive their loans, and make repayments through the local bank, SACCO, cooperative, or microfinance institution, just as they would with any other loan.
This approach is intentional because local lenders have a much better understanding of their customers’ cash flow patterns, local regulations, seasonal income cycles, and community dynamics than an external funder ever could.
It also allows a relatively small amount of philanthropic funding to unlock a much larger volume of lending, since the foundation strengthens local institutions rather than trying to lend directly to millions of borrowers itself.
What other lenders can take from this model
You don’t need a development budget to use this thinking. A few habits carry over to any lender, anywhere.
First, understand your borrower before you design the product, not after. A farmer, a small informal shop owner, and a gig worker with only app data all carry different risks and need to be assessed differently.
Using one generic scoring model for all of them usually means rejecting good borrowers who just don’t fit the mold, and approving some who don’t actually fit either.
Second, technology helps most when it’s paired with real knowledge of the market, not used as a replacement for it. Alternative data and digital verification speed things up, but a scoring model built on ride-hailing data from one city won’t automatically work for farmers in another region. The tools are only as good as the local understanding behind them.
Third, no lender has the full picture alone. Credit bureaus, mobile network operators, and even other lenders often hold pieces of information that fill in someone’s risk profile.
Working together, even with competitors, often opens doors that would be too expensive or too risky to walk through solo.
And finally, growing fast is not the same as growing well. Lenders who push loan volume up quickly, without matching it with careful underwriting and borrower support, usually watch that growth turn into defaults a year or two later.
Sustainable lending comes from realistic repayment plans, staying in touch with borrowers, and honestly tracking how the portfolio is performing, not just from having more money to lend.
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Where this leaves lenders
The idea behind how the foundation works comes down to something fairly simple: expanding credit takes money, yes, but it also takes stronger institutions and products built around how people actually earn and spend.
By putting its support behind local lenders instead of lending directly, the foundation reaches far more people than it ever could on its own, without holding a single loan itself.
By putting that support behind local lenders instead of lending directly, the foundation reaches far more people than it ever could on its own, without holding a single loan itself.
That lesson applies to any lender, anywhere in the world, big or small. Careful underwriting, realistic products, real partnerships, and patience tend to beat chasing speed and size.
As technology keeps making it cheaper to reach new customers, the lenders who pair that technology with a genuine understanding of who they’re lending to are the ones who will still be around and still be trusted a decade from now.
