Mastercard, Mercado Libre, IDB and Common Cents Lab team up to bolster financial resilience in LATAM

By Pavithra R

Mastercard, Mercado Libre, the IDB’s Retirement Savings Laboratory, and Common Cents Lab, a financial behavior research lab at Duke University, have teamed up for a new initiative to use behavioral science to help entrepreneurs and SMEs in Latin America make better financial decisions.

The partners collaborating in this program agree that financial resilience is the ability to prepare for, deal with, and recover later from economic shocks. Behavioral Economics is the study of how people behave and make decisions. Integrating technology with learnings from Behavioral Economics in the financial services space, may help people make financial decisions that are more beneficial to their life in the long run.

Under the deal, with support from the Mastercard Center for Inclusive Growth for the next two years, Common Cents Lab team will work with digital platforms including Mercado Libre, the largest e-commerce site in Latin America, to design strategies based on behavioral science, which can be validated and adopted by multiple players in the region. This move is expected to contribute to the growth of digital platforms offering greater financial resilience for the most vulnerable entrepreneurs and workers.

“Common Cents Lab has proven the power of applied behavioral science in the United States and a number of other countries around the globe. Their expertise and insights will be a powerful counter to the urgent and rapidly growing financial needs of people in this region,” said Luz Gomez, director for Latin America and the Caribbean at the Mastercard Center for Inclusive Growth.

The program will launch first in Mexico and then will be implemented in other countries where the e-commerce platform operates. To improve the financial resilience of SMEs in Mexico and the LATAM region, the program will use the expertise of its partners, to develop changes and notifications within the Mercado Libre platform and study its impact on profits, short- and long-term savings, or the use of credit products among its sellers

“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. By designing behavioral-informed interventions that exist within these digital platforms, we can produce significant improvements in financial decision-making and resiliency that will serve as a model for best practices in other countries,” said Common Cents Lab co-founder Mariel Beasley.

The initiative builds on Mastercard’s ongoing efforts to address the economic challenges facing individuals in the region.