Will Western Union Be the Catalyst for Mobile Money in Latin America and the Caribbean?

The most well-known mobile money implementation in Latin American and the Caribbean has been in Haiti. But with a large and diverse population of mobile phone users (460 million!) in Latin America and an estimated 35% of adults with an established bank account, it would seem clear that mobile money (or mobile financial services – MFS) should have taken off. Yet, besides Haiti, MFS have been almost none existent.

Photo Credit: insightVas.com

Many arguments have been made for this. Back in 2010, the GSMA interviewed Serge Elkiner, President and Founder of YellowPaper. YellowPaper developed technology for users to access MFS in Colombia, Peru, Ecuador, Guatemala, Dominican Republic, Bolivia, Haiti, and Panama. He mentioned that one of the reasons for the lagging of MFS in Latin America is government regulation. Other reasons include a lack of desire by MNOs to launch MFS products, money transfer services not adopting mobile transfer platforms, the already well-established financial service sector in the region, and the size of the many of the economies throughout the region.

Recently there have been movements in MFS in the region. As mentioned before on this blog, Red Cloud Technology along with BlueOrchard and other has invested $1.2 million in Nube Roja, Bolivia’s first mobile money platform. Telefonica has teamed with MasterCard on a joint venture last year to expand financial services in 12 Latin American countries. Finally Western Union has entered the mobile transfer market in Latin America by partnering with Tigo in Paraguay. Customers using Giros Tigo (Tigo Cash) will be able to receive money from other countries via their mobile phones. The service will begin in Paraguay and then be implemented in other countries in the region on a rolling basis. Giros Tigo has been providing MFS for over 18 months and the partnership with Western Union is an addition to the services provided to customers.

But MFS move forward in the region, what will be the catalyst to move it to wide spread adoption? In Haiti, the catalyst was the investment made by the Gates Foundation. Clearly there was a need for the people in the country to access formal financial services. But until there is a business case (ie profit can be made), the private sector will not move quickly enough to provide products and services that can scale and are user focused.

With remittances playing such a large role in the economies of Latin America, the ability to receive them via mobile phones could be the spark. On annual basis, Latin America and the Caribbean receive more than $60 billion in remittances. But it has continued to be processed through the traditional practices of Western Union and MoneyGram. Western Union has been making a push mobilize their services (as seen above), but time will tell if it can create the spark for individuals to start adopting MFS in Latin America.

April 15, 2012/by actualize

Agriculture, Economic Growth & Trade, Financial Markets, Mobile, Originally posted on the GBI Portal

World’s First Virtual Card on Mobile Phone Launched in Africa

Customers in Africa can leapfrog conventional payment methods and benefit from greater financial access in an open banking system

Earlier this month in Nairobi, airtel Africa, Standard Chartered Bank, and MasterCard Worldwide announced the launch of the world’s first virtual card, known as the airtel 1time Shopping card. The airtel 1time Shopping Card operates off a wallet residing on a mobile phone. This innovative payment method aims to serve the global unbanked population in Africa, where there are close to 400 million mobile phone users with an unbanked population of 230 million households.

airtel Africa, Standard Chartered Bank and MasterCard (not pictured) collaborate on the first virtual card on a mobile phone

Michael Miebach, Division President, Middle East and Africa, MasterCard Worldwide observed how that airtel 1time Shopping card will connect consumers to the global marketplace, “Whether located in urban or rural communities, people will be able to participate in commerce from their hometown to anywhere in the world,” he commented.

This is how the system will work: airtel Africa customers in Kenya will soon be able to use their mobile phone to make online purchases from MasterCard merchants around the world and through a simplified online transaction. Each time an airtel customer is shopping online he or she will be able to request a single use shopping card number. The airtel money services then will generate a special 16 digit number that enables the completion of the transaction and when the transaction is completed, a confirmation message will be sent to the consumer’s handset.

Utilizing the mobile technology platform, airtel’s vast consumer penetration, combined with the financial and regulatory framework provided by Standard Chartered Bank, and global acceptance of MasterCard, consumers will be able to transact in a reliable, convenient and secure environment.

Airtel CEO Manoj Kohli

Speaking about the Groundbreaking innovation, Manoj Kohli, airtel’s CEO and Joint Managing Director, stated:

The airtel 1time Shopping Card…will deliver innovative and relevant mobile solutions that will help consumers overcome the daily challenges in their lives. The solution will offer consumers a robust e-commerce solution that delivers security, accessibility, acceptance, ability and a global reach

This single-use shopping card will soon be available in Kenya and rolled out to markets across Africa, subject to regulatory approvals.

February 15, 2011/by actualize