Swedish retailer H&M wants the garment factories that supply its stores to pay their workers digitally to reduce costs, Devex reports. According to the article, the factories can save time and money by moving to digital payments.
H&M is the first global fashion brand to join the partnership and commit to encouraging its suppliers to pay workers digitally. The Swedish fashion house employs 1.6 million people through its supply chain, who will benefit from greater access to financial services and the ability to make and receive payments in a faster, safer and more transparent way, according to the report. The partnership’s report also states that digital payments are also less vulnerable to loss and theft and can be more accurately recorded.
While this is all presented as altruistic effort to help workers, it is not clear that digital payments would be an immediate benefit to them. According to UNESCO statistics, the illiteracy rate of adult females in Bangledesh, which are the people who do most of the garment work, is about 43%. These workers will find it hard to take advantage of digital banking and are at risk of being taken advantage of by unscrupulous helpers. Acceptance may also be an issue if the places where those workers shop are not set up to accept electronic payments.
So, while this is a real boon for the factory operators, and presumably H&M, which will presumably lower its supply costs, questions remain about whether or not the workers benefit. It is likely that workers will need more than just direct deposit to change their financial lives.
Overview by Ben Jackson, Director, Prepaid Advisory Group
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