Ajay Banga, in his former senior executive roles at Mastercard, waged a decade-long “war on cash.” Under his tenure, the company did more than just about any other to demonise the role of physical money around the world.
Almost exactly two months ago, on February 23, the Biden administration unveiled its nomination for the next president of the World Bank, the Washington-controlled Brettons Wood lending institution. That choice was Ajay Banga, a former CEO of Mastercard Inc and senior executive of Citigroup. In a statement the White House praised Banga for his “extensive experience leading successful organizations in developing countries and forging public-private partnerships to address financial inclusion and climate change.”
As Vijay Prashad noted at the time, there will be no other official candidates for the job since — by convention — the US nominee is automatically selected for the post:
This has been the case for the 13 previous presidents of the World Bank—the one exception was the acting president Kristalina Georgieva of Bulgaria, who held the post for two months in 2019. In the official history of the International Monetary Fund (IMF), J. Keith Horsefield wrote that US authorities “considered that the Bank would have to be headed by a US citizen in order to win the confidence of the banking community, and that it would be impracticable to appoint US citizens to head both the Bank and the Fund.”
By an undemocratic convention, therefore, the World Bank head was to be a US citizen and the head of the IMF was to be a European national. Therefore, Biden’s nomination of Banga guarantees his ascension to the post.
And so it has proven to be. When nominations for the post closed three weeks ago, there were no other publicly declared candidates. Which begs the question: Who is Ajay Banga? And more specifically, what could his appointment mean for the global war on cash?
A “Davos Type of Globalist”
Apart from his Indian heritage, Banga is hardly an atypical choice for World Bank president. He comes from the private sector, has next to no prior experience of development finance and investment, and is closely tied to both Wall Street and corporate America. Up until now his entire career has been spent working for international corporations, from his early days at Nestle in India to later stints at Citigroup and US payments processing giant Mastercard, where he served as president and CEO before being made executive chairman.
On leaving Mastercard in December 31, 2021, Banga joined the growth equity firm General Atlantic. He is chairman of the Partnership for Central America, a public-private partnership ostensibly focused on economic development in the “northern triangle” of Central America. Banga was also the longest-serving chairman of the U.S.-India Business Council (USIBC) representing more than 300 of the largest international companies operating in India, and until recently was chairman of the International Chamber of Commerce.
He has long been a fixture at major events like the World Economic Forum. “He’s very much the Davos type of globalist,” said Bright Simons, an analyst with Imani Africa, a think tank based in Accra, Ghana. And in the eternal spirit of the WEF, Banga plans to leverage public-private partnerships in his new role at the World Bank, recently telling the FT that he will turn to the private sector for both funds and ideas.
As Prashad notes, Banga’s resume is not dissimilar from that of most US appointees to head the World Bank:
The first president of the World Bank was Eugene Meyer, who built the chemical multinational Allied Chemical and Dye Corporation (later Honeywell) and who owned the Washington Post. He too had no direct experience working on eradicating poverty or building public infrastructure. It was through the World Bank that the United States pushed an agenda to privatize public institutions. Men such as Banga have been integral to the fulfillment of that agenda.
Banga has also played a major part in the global war on cash, particularly during his more than 10-year tenure at Mastercard. For payment companies like Mastercard and Visa that generate fees from facilitating money transfers between banks accounts, cash is their number one rival. In 2010, just months into his now job as CEO, Banga openly declared war on cash:
“In today’s terms, only 3% of retail spend in India or in China are through electronic payments. The rest is cash. I have declared war on cash; I believe MasterCard will grow by growing against cash. If you keep looking at 3%, everybody’s a rival; if you look at the remaining 97%, everyone’s a partner.
The strategy appears to have paid off, at least for Mastercard shareholders: During his 11-year tenure, the company tripled revenues, increased net income sixfold and grew its market capitalization from under $30 billon to more than $300 billion.
By 2017, Banga was calling for companies to work together “to take cash out,” albeit not quite completely. In other words, to kneecap it. From Livemint:
Eighty-five percent of the world’s retail payments—person to merchant are in cash. It is 95% plus in this country [India] even after demonetization. It’s 80% in Japan. So it is not a developed country versus developing country thing. It is a huge open marketplace. And no one company can win it by itself. It is going to need lots of companies focusing on taking out cash because cash is expensive and cash is not useful the way it used to be.
It shouldn’t be zero. It’s got a role to play, it’s anonymous and people like anonymity, its fungible and people like fungibility. I am respectful of that but why should it be 95%. So who do I view as my competition? Cash. I don’t view another network, I don’t view Paytm, I don’t view Apple as competition. We are actually working with all of them. They all need our technology.
A Decade of Demonising Cash
Both Mastercard and Visa have played arguably the biggest role in demonising cash over the past decade or so. As Brett Scott documents in his book Cloud Money, the payments industry has “consistently cast card payments as being safer, cleaner and higher status than cash, thereby slowly associating the latter with crime, disease and low status.”
The demonisation campaign hit a whole new level when cash became erroneously associated with COVID-19 infections. In early March 2020, a WHO spokesperson said:
“We know that money changes hands frequently and can pick up all sorts of bacteria and viruses … when possible it’s a good idea to use contactless payments.”
Media outlets, payment card companies, fintech start-ups and big-box retailers seized on the WHO’s comments and magnified them, sparking fears over the safety of cash.
But for Mastercard this was nothing new. The company has been stoking the global public’s fear of cash as a vector of bacteria and disease for at least ten years. In March 2013, the Banga-led firm sponsored an Oxford University “trial” into the germ loads found on the banknotes of a selection of global currencies. Mastercard reserved the exclusive right to present the findings of the trial as well as the results of a highly misleading survey on public perceptions of the health risks of cash, which it did in gaudy glory.
In his 2021 article, “How Mastercard Invented the Health Hazard of Cash“, the German financial journalist Norbert Häring presented a sample of the resulting press releases:
United States
CNN, March 28: “If you thought dirty money was only found in offshore bank accounts, check your wallet instead. But you may want to wash your hands afterward. […]. An Oxford University study found an average of 26,000 bacteria on bank notes.” Source
Switzerland
Blick, March 26: “Disgusting money: many Swiss find cash unhygienic[.] 64 percent of Swiss people find their cash unhygienic. No wonder, since it is particularly dirty.” Source
The Local, March 27: “[…] a study by researchers at Oxford University concludes that legal tender in Switzerland is among the dirtiest in Europe […].” Source
France
Le Monde, April 1: “Is Cash Dirty?” Source
UK
Metro, March 26: “More than half of Brits fear germ risk from filthy money – with good reason[.]” Source
Spain
Infosaulus, March 26: “63% of Spaniards consider coins and banknotes to be the dirtiest items[.]” Source
Denmark
DR, March 26: “Banknotes and coins are dangerous germ bombs[.] Danish banknotes are so dirty and filled with harmful bacteria that they can pose a health risk.” Source
Russia
Komsomolskaya Pravda, March 27: “Each Russian banknote has 30 thousand bacteria on it[.] […]. Our Ministry of Finance plans to introduce restrictions on large payments in cash. […]. Officials say that this way it is easier to fight those who do not pay taxes. […]. Now, there is another reason to get rid of cash […]: hygiene.” Source
Ukraine
Svobodnaya Pressa, March 26: “Even new banknotes are home to thousands of bacteria[.]” Source
Japan
CNN Japan, March 31: “An independent study conducted […] by Oxford University scientists found that there are an average of 26,000 bacteria on each banknote.” Source
Irorio, April 2: “Banknotes are the dirtiest thing you can touch, according to a survey by Mastercard[.]” Source
Later that year, as the winter flu season loomed, Mastercard doubled down with the following tweet:
Achoo!
Prepare for flu season by going #Cashless #DirtyCash pic.twitter.com/c906V9WET1— Mastercard News (@MastercardNews) November 12, 2013
Fostering “Financial Inclusion” Across Africa
At the same time, Mastercard was driving cashless initiatives across Africa and other parts of the “Global South”, all in the name of “financial inclusion”.
In 2012, the company provided seed funding for the Better Than Cash Alliance, (BTCA), a UN-hosted partnership of governments (all of them in the so-called “Global South”), companies and international organizations that promotes cashless initiatives in Africa. Its mission, in its own words, is “to accelerate the transition from cash to digital payments globally.” Other sponsors include the Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, the U.S. Agency for International Development and Visa Inc — again, mostly US companies, philanthropic foundations and government bodies.
In 2013, Banga visited Nigeria where he heaped praise on the central bank’s “Cashless Nigeria” program:
“MasterCard’s close collaboration with the CBN and other stakeholders in Nigeria has proved that collaboration between public and private sector organizations is the key to driving meaningful change in any economy.”
The Central Bank of Nigeria’s “Cashless Nigeria” program culminated earlier this year in a disastrous cash swap program that has wroughtimmeasurable damage on the country’s already fragile economy. The Center for the Promotion of Private Enterprise [CPPE] said the cash shortages had not only stalled economic activity in the country but had become a major risk to the livelihoods of Nigerians:
Nigerians have not been this traumatized in recent history. The economy is gradually grinding to a halt because of the collapse of payment systems across all platforms. Digital platforms are performing sub-optimally because of congestion; physical cash is unavailable because the CBN has sucked away over 70 per cent of cash in the economy and the expected relief from the supreme court judgement has not materialized.
The “Financial Inclusion” Myth
In 2016, Banga spearheaded a partnership with a partially World Bank-owned data services firm, Net1 and South African Social Security Agency (SASSA), to use MasterCard debit cards for welfare grant distribution. The project was ostensibly aimed at promoting “financial inclusion” by providing millions of unbanked South African citizens with basic financial services. But as a recent article by the Committee for the Abolition of Illegitimate Debt (CADTM) documents, the ultimate beneficiaries were not the low-income citizens, but the fintech CEOs, their shareholders and investors and, of course, the economies of the Global North, in which their operations are invariably headquartered:
While Banga had rapidly rolled out 10 million cards, Net1 was building subsidiary companies to sell financial inclusion products to grantees, including loans (Moneyline), insurance (Smartlife), airtime and electricity (uManje Mobile) and payments (EasyPay).
As a monopoly service provider, Net1 controlled the entire grant payment stream from the state Treasury to recipients. It was well positioned to not only transfer the grant payments, but to sell financial products and extract repayments at the same time as grant payments were made.
There was no possibility for grantees to default on their debts because repayments were deducted automatically, and no longer depended on consumer behavior. As repayments to Net1 whittled away the promised value of social entitlements, grantees turned to other formal and informal lenders, many of whom were also repaid automatically through Net1’s same debit-order powers.
While Net1 claimed to offer credit without interest, their monthly “service fees” were typically over 5% interest per month. Though technically allowable under the National Credit Act, these interest rates amounted to over 30% on a standard 6-month loan. At the time, interest rates on a credit card were slightly over 20% per year. Through their high-priced credit, Net1 gained more income from financial inclusion products than from the distribution of social grants from 2015-17.
Arguably the most insidious aspect of the program was that Net1, with Microsoft’s help, essentially developed a shadow banking system that did not, in reality, bring grantees into the former financial sector but instead segregated them in a monopolistic digital payment space outside of state oversight and control:
The partnership between Mastercard and Net1 was novel because they created a debit card that ran two parallel payment systems: Europay-MasterCard-Visa and the Universal Electronic Payment System (UEPS). The former worked online with a PIN number as it does throughout the world; the latter worked offline with biometric security and was specifically designed for South African grantees.
The implication of this dual system was that the vast majority of transactions by social grant recipients were through the offline UEPS system, either at Net1 paypoints or retailers using Net1 point of sale devices. Instead of these transactions being settled through the National Payment System, thereby becoming visible to the country’s Treasury and Reserve Bank, they were settled internally by Net1.
Most of these deductions for Net1 products happened outside traditional financial structures. This led to significant financial predation by a monopoly service provider.
This example underscores the myth of financial inclusion often peddled by Western banks, fintech companies and payment processers. As the article notes, the real motives of the companies seeking to expand digital financial services to the world’s unbanked have much more to do with advancing their own financial interests and promoting a particular ideological worldview, than addressing structural economic injustice:
Even leading CEOs in the fintech sector, such as PayPal’s Dan Schulman, now readily concede that financial inclusion is simply a euphemistic ‘buzzword’ for recruiting as many new clients as possible, the better to be able to quietly extract a never-ending stream of value from intermediating their trillions of dollars’ worth of tiny financial transactions.
Like Banga, Schulman also claims that Paypay’s biggest competitor is the “hugely inefficient” use of cash, which still accounts for 85% of global retail payments. Banga himself has repeatedly claimed that maintaining cash networks and infrastructure costs around one to two percent of GDP. But as the Paris-based not-for-profit association Cash Essentials notes, this is simply wrong:
A number of central bank studies have looked into the social costs which vary from 0.12% of GDP in Finland to 0.58% in Belgium. A 2019 Deutsche Bundesbank study found that the average cash payment costs €0.24 vs €0.33 for a girocard and €0.97 for a credit card. A separate academic study found that across 52 countries, the average cash transaction cost $0.54 vs $1.52 for a debit card transaction.
As Banga prepares to take the helm at the World Bank, it would be remiss to overlook the unveiled hostility he has consistently held toward cash, which remains the most inclusive payment method in both the global south and north.
He now takes the reins of one of the world’s most powerful international financial institutions, which itself has been instrumental in driving digital identity programs across developing countries through its Identification for Development (ID4D) program. That program has been “linked to severe and large-scale human rights violations in a range of countries around the world, affecting social, civil, and political rights,” according to a recent paper by the NYU School of Law’s Center for Human Rights and Global Justice (CHRGJ). As for Mastercard, it is pushing its tentacles into biometric payments and ID systems, smart city projects and even pilot projects for Central Bank Digital Currencies (CBDCs).
If there is one possible silver lining to all of this, it is that Banga appears to have tempered his views on cash in recent years — at least in his public statements. In an October 2020 interview with TED journalist Whitney Pennington Rodgers, he acknowledged that cash would not and, more importantly, should not go away: “I think cashless, actually, is something we are not going to get to, and we probably shouldn’t.” Banga correctly noted that many people depend on cash because they are on the wrong side of the digital divide or lack proof of identity.
It is also true that the influence of the World Bank and its sister institution, the IMF, may well be on the wane as the world shifts toward a multipolar order. For the first time since their creation in 1944, the two Brettons Wood institutions face serious competition — first, from China, which in 2017 became the world’s largest official creditor since 2017, surpassing the World Bank, IMF and 22-member Paris Club combined; and second, from the Contingency Reserve Arrangement, established in 2015 by the BRICS countries as an alternative to the IMF, and the New Development Bank (NDB), popularly known as the BRICS Bank.
As Vijay Pashad notes, the CRA and NDB have a markedly different outlook from their Bretton Woods counterparts:
These new institutions seek to provide development finance through a new development policy that does not enforce austerity on the poorer nations but is driven by the principle of poverty eradication. The BRICS Bank is a young institution compared to the World Bank, but it has considerable financial resources and will need to be innovative in providing assistance that does not lead to endemic debt. Whether the new BRICS Think Tank Network for Finance will be able to break with the IMF’s orthodoxy is yet to be seen.