August 25, 2016

Latin America’s Leading Mobile Money Providers

There are currently many mobile money initiatives in LAC, with more in the pipeline.  To date, there is no single dominant platform in the region like M-PESA in Kenya.  This post highlights some of the active or soon-to-be active mobile money providers.   

Telefónica, a Spanish telecom and a leading operator in LAC, plans to roll out mobile financial services in four South American countries starting this year.  Seven months ago, Trivnet, an Israeli company that makes financial management software, won the contract to supply mobile banking software in Latin America to Telefónica.  A wide range of mobile financial services will be offered, including P2P money transfer, mobile commerce, bill payment and mobile banking.  Reportedly, twelve Telefónica subsidiaries in Latin America will be offering a mobile money platform.    

Founded in 2004, YellowPepper provides mobile financial services throughout Latin America by partnering with mobile network operators and financial institutions in the region.  YellowPepper’s technology serves more than 2 million customers in Colombia, Peru, Ecuador, Guatemala, Dominican Republic, Bolivia, Haiti, and Panama.  The company’s open architecture platform allows banks, mobile network operators, merchants, and consumers to access its network.  In October 2010, YellowPepper received the first equity investment in a mobile banking firm in Latin America by the International Finance Corporation (IFC), the private sector arm of the World Bank Group.  This is an important distinction when you consider the role of multilaterals in helping to advance regulation.   

Brazil is home to various “people’s banks” that provide financial services to the country’s working poor.  Shortly after Lula became president, the central bank loosened banking regulation in an effort to bring services to the nation’s sizable unbanked population. The new rules allow for financial institutions to operate bank terminals outside of traditional branches.  Additionally, the central bank encourages lending to the poor by allowing banks to use up to two percent of reserve capital (money otherwise kept with the central bank) for low-interest loans to low-income Brazilians.  Most institutions operating branchless banking in Brazil offer their services via a mobile channel. 

The largest of the new people’s banks is Banco Postal, a joint-venture between Banco Bradesco, the top private-sector bank, and Correios, the Brazilian postal network.  According to the Correios website, 10 million people have opened accounts with Banco Postal since its inception and 5,000 more accounts open every day.  Banco Postal’s network consists of 6,194 locations throughout 95 percent of the country’s municipalities. 

Banco Popular do Brasil, an offshoot of state-owned Banco do Brasil, is Banco Postal’s main competitor.  Banco Lemon, a small privately-owned bank founded by Argentine investors in 2002, provides basic financial services to users in poor urban neighborhoods.  According to the company’s website, Banco Lemon’s agency network consists of 5,200 points in various bakeries, pharmacies, supermarkets, stores, and kiosks across Brazil.        

Several companies straddle the prepaid card and mobile money spaces. 

NovoPayment is a prepaid card service provider and program manager with programs backed by Mastercard, Maestro, Visa, and Visa Electron.  The company is headquartered in Miami and currently operates in Colombia, Mexico, Peru and Venezuela.  NovoPayment supplies stored value cards to companies (for distribution to employees) and directly to individuals without bank accounts.  Prepaid cards may be used to make purchases, pay utility bills, or access ATMs.  Cardholders can also transfer money via mobile phones and purchase additional air time for cell phones. 

Transfercel targets unbanked middle class Mexicans and Mexicans living in the United States who want to send money home.  The Transfercel Prepaid Debit Card is tied to a cell phone application, which allows users to instantly send money from the U.S. to Mexico for a five-dollar fee, within the U.S. for two dollars, and worldwide for only six dollars   According to the Transfercel Mexico website, the card is issued and backed by Scotiabank in Mexico.  There are currently eight agent locations in the U.S., all in the Los Angeles area.

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