As a global network with more than six decades of experience building inclusive digital ecosystems, Visa understands that creating the conditions for sustainable growth at scale is a shared responsibility of the public and private sectors. That is why we are launching the Visa Economic Empowerment Institute (VEEI)—a new resource for policymakers that applies the insights of a global network to the unique challenges of local communities and national governments. Our mission is to be a resource to policymakers seeking to make the digital transformation of the economy a force for greater empowerment.
The COVID-19 pandemic has rapidly reoriented life across the globe. Many people and many industries are suffering severe economic effects as a result of the health risks and the lockdown measures taken to protect citizens. Some businesses, particularly those that had already begun to digitize, are seeing increased demand for their services. And some industries are being born to meet new consumer demands. Even as new opportunities are created, many businesses and individuals are struggling. In many cases, a disproportionate impact is felt by groups that are already structurally disadvantaged and lack equal access to economic opportunity.
Economic empowerment is about removing the structural barriers and systemic biases that degrade trust and entrench inequality. Just as Visa creates a global network for electronic value exchange, the VEEI will provide a global platform for the exchange of policy ideas on racial, social, and economic justice. Research definitively shows that such barriers not only harm individuals and businesses from flourishing but also diminish the welfare of communities and economies. 
It is no coincidence that the Institute was first announced as part of Visa’s commitment to digitally enable 50 million small businesses. Small businesses will play a vital role in helping communities around the world recover—they account for more than half of global employment, yet they are among the most affected by the pandemic. With small business recovery and social equity always in mind, the Institute will focus on research areas that Visa knows best, and that are essential to economic empowerment: equity and inclusion, trade, and the future of payments.
Fostering Digital Equity and Inclusion
Digital equity and inclusion rest on two overarching foundations: enablement and the ecosystem. Each has multiple dimensions that interact powerfully.
Enablement, which is the action of giving someone the authority or means to do something, results from use and depth of impact, knowledge and skills, costs, and equity in benefit. The first of these four elements, impact, begins with how often, how many, and for how long digital products are used and the value created. The answers are relative to the need and the user. How much impact this has is relative to the need and the user. For example, a vendor selling food from a push cart on a street corner may need a simple way to accept card and mobile payments. The owner of a growing hand-knit sweater company needs a constant online presence and the know-how to advertise and sell her products in the global marketplace. We also need to ask ‘who benefits?’ from the technology and how individuals perceive that in order to advance equity and inclusion.
Ecosystem refers to the physical infrastructure, human networks, governing frameworks, and ownership structures that interact powerfully in today’s hyper-connected digital world. Ecosystems include access to digital services and the minimum conditions for those, which are in turn shaped by factors including access to digital hardware and mobile phones, data and telecommunications services, electricity, and digital identity. Ecosystems include products and services, and their design. Security, data privacy, and consumer protection are important factors of the ecosystem, as are the governing policies, laws, and regulations.
Advancing digital equity and inclusion starts with a clear-eyed discussion of the levers and drivers of these foundations, and how those impact and ripple around the world. This is what VEEI is setting out to do. In coming months, we will be examining foundational questions, such as where do digital payments and connectivity create value at the economy level, at the small and micro business level, at the individual level? What are the necessary minimum conditions to achieve this? What are the important underlying principles and are digital ecosystems adhering to those? Is there a lifecycle? We will dive deep to map the key elements of “enablement” and “ecosystems” and ask how progress can be measured. Importantly, we will also examine what the driving public policies and financial regulations are that can drive digital equity and inclusion.
Unlocking Growth through Trade
Governments across the world have pledged sizeable support packages to keep MSMEs afloat during COVID-19 lockdowns. International institutions such as the World Bank and regional development banks have also put in place support packages to support micro and small businesses recovery. As policymakers begin to think about long-term recovery, they should also focus on how global trade rules can support MSME recovery in an increasingly digital economy.
Unfortunately, trade agreements have not kept up with decades of tremendous economic growth in the digital economy and advances in technology. Several trade agreements have electronic commerce chapters but many of these date back to the early 2000s, including those that govern the international trade system at the World Trade Organization. With no firm commitments on digital trade, protectionism is on the rise, threatening MSME growth and their connections to the broader digital economy.
The VEEI will be focused on five key areas of digital trade:
Modernizing Global Trade Rules
VEEI fellows will examine best practices in international trade agreements for the digital age, making recommendations for key principles and specific provisions to address pain points.
International standards enable small business in different countries using different systems to seamlessly engage in global commerce and, therefore, should be adopted whenever possible.
Highlighting the Importance of Data Flows in Trade
Growth in digital services and digital trade will be critical to global economic recovery, but several challenges threaten to impede cross-border commerce. A growing number of measures, such as requirements to use domestic infrastructure, localize data, and licensing and equity minimums for foreign firms, prevent international service providers from delivering services in some countries and inhibit countries from taking full advantage of the promise of digital trade.
Facilitating the Gains from Trade
International trade brings tangible benefits. VEEI research will examine ways to capture these benefits, in particular for small businesses and underserved groups, such as women, who have traditionally been cut off from the full range of benefits from exporting.
Exploring Digital Trade and Security
With the rapid increase in digital trade, cross-border commerce is increasingly targeted by fraud and cybersecurity threats, with small businesses particularly vulnerable. Unfortunately, many policies aimed at improving cybersecurity and trust are either ineffective or counterproductive and have the opposite of the intended effect. The VEEI will draw on Visa’s deep experience in cybersecurity to advance recommendations for maintaining the benefits of free flows of data with security and trust.
Imagining an Open Future for Payments
The ways people and businesses make and receive payments are rapidly evolving in step with the changing nature of commerce. In the post-pandemic world, innovators, entrepreneurs, and policymakers have a generational opportunity to make digital financial services a force for equity and empowerment. Today’s consumers expect speed and immediacy in all of their interactions, especially when making a purchase. As more options emerge and life becomes increasingly instantaneous, consumers have less and less patience for additional steps. Removing frictions has been the hallmark of the most successful product, service, and payments innovations in recent years. From requesting and paying for a ride via an app to using a mobile phone at the retail point of sale, making life easier, more efficient, and more pleasant has transformed virtually every industry in the recent past. From ride-sharing to e-commerce, frictionless payment experiences are the new normal. The COVID-19 pandemic accelerated these transformative trends.
Consumers not only expect less friction, they are wary of handling physical cash. Sellers and marketplaces are even more focused on security as face-to-face transactions go online. Governments, having taken extraordinary fiscal measures to keep small businesses afloat, must now help these newly-digital companies thrive in an increasingly competitive global e-commerce marketplace.
Trust, security, and reliability are fundamental to payments, which are the plumbing for the world economy. Payments stakeholders must help maintain the global ecosystem and continually improve capabilities that enable individuals, businesses, and economies to thrive. A view has emerged in some policy-making circles that central banks should develop payment networks upon which private sector actors can innovate, particularly at the user experience level. The private sector can certainly do this, but it can (and does today) do more; the VEEI considers it vital that the private sector continue to innovate with regard to payment rails.
Visa has more than six decades of experience innovating at the network and user experience levels, making considerable investments  and driving improvements in security and resilience along the way, in over two hundred geographies. The Institute believes there are ample opportunities for the public and private sectors to work together to solve problems in areas like financial inclusion, faster payments and disbursements, cross-border payments, and new payments ecosystem activation. For example, there are about 75 countries that have implemented faster payment systems or who are planning to do so. Over 50 countries are looking into retail central bank digital currencies. Remarkably, over 40 countries fall into both camps. The private sector can help policymakers sort out the various use cases and make sure these new ecosystems work for everyone.
Choosing the Path of Empowerment
Business leaders choose empowerment when they remain focused on driving long-term economic value and creating opportunity throughout the economy. Political leaders, central bankers, and policymakers choose empowerment when they remove barriers to digital trade, create incentives for investment, and provide a policy environment that rewards innovation and growth. Working in partnership, business and the public sector can harness the power of networks to improve productivity and raise global standards of living for everyone, everywhere. A network can help connect a small merchant to a customer. It can connect a government to an expatriate in need of services. It can help people help each other. At its core, a network is a community. There are people on both ends.
Visa aims to use the power of our network to leverage our insights and those of our key partners to help enable inclusive and equitable economic recovery and growth. The VEEI looks forward to exchanging views with public sector policymakers and private sector innovators who will drive economic empowerment everywhere.
About the Authors
Dr. Barbara Kotschwar is Executive Director of the Visa Economic Empowerment Institute. Before joining Visa, she led the World Bank’s investment policy team’s work on services and investment entry. Before that, she was Research Fellow at the Peterson Institute for International Economics. She has advised governments in Latin America, Africa, and Asia on trade and investment policy and is an Adjunct Professor at Georgetown University.
Chad Harper is Global Payments Fellow in the Visa Economic Empowerment Institute. He previously spent nearly 20 years at the Federal Reserve Banks of San Francisco, Chicago, and Richmond in cash, financial services, and payments outreach and analysis.
 Visa has invested nearly $9 billion over the last five years in enhancing and securing its core technology platforms and launching new products and capabilities for its clients, partners, and employees.