Mastercard Debuts Enhancements to Open Banking Program

Mastercard is upgrading its open banking for lending program, powered by employment/income verifier Argyle.

The new features, announced Tuesday (Aug. 13), lets Mastercard offer income and employment coverage to the estimated 95% of the U.S. workforce who are paid through direct deposit.

“Securing a loan can be overwhelming, and those challenges are compounded for the 19 percent of individuals who fall outside of the traditional credit reporting system and therefore face difficulty opening a credit card or renting an apartment,” Mastercard said in a news release provided to PYMNTS.

“Digitization could make a difference; a recent Mastercard survey of lending trends shows 90% of consumers who do not have sufficient credit history to qualify for a loan are willing to grant secure digital access to their financial accounts to obtain one,” the release added.

The release noted that income and employment verification processes today are manual and can be seen as labor intensive, with applicants forced to gather pay stubs and tax documents, and lenders forced to spend resources verifying them.

“As a result, consumers are more likely to abandon the process completely, and those without steady income streams, including members of the gig economy, face additional challenges in disclosing their payment history,” Mastercard said.

The company said it eases this process by expanding its verification of income and employment solution to include Argyle’s credentialed payroll service, making it easier for financial institutions to digitally verify an applicant’s income and employment.

“Through a single integration to Mastercard’s Open Banking platform, lenders have the flexibility to verify income and employment data through connected bank accounts or via payroll systems with the applicant’s permission,” the company said. “Mitigating the need to collect income documentation and manually review data, the new solution renders an efficient and convenient process for lenders and applicants.”

Mastercard’s efforts come at a time when many consumers are showing an interest in open banking, even if far fewer are actually using it.

The PYMNTS Intelligence/Trustly report “Consumer Sentiment About Open Banking Payments” found that just 11% of American adults had used open banking payments in the past year, even though almost 46% expressed strong interest.

“To unlock this potential, providers must address key barriers such as security concerns, enhance awareness and implement compelling incentives,” PYMNTS wrote.

What’s keeping consumers away? The report found that 56% of non-users point to trust issues as a major barrier, while 44% said they weren’t familiar with the concept of open banking payments. Concerns about security were common among older consumers, with 64% of baby boomers and seniors highlighting this issue, versus 44% of Generation Z and millennials.