MasterCard and Telefónica to Offer Mobile Banking in Latin America
MasterCard and Telefónica have announced a joint venture to develop mobile financial solutions in 12 countries in Latin America where Telefónica is present with the Movistar brand. The new company, managed independently, will have 50/50 ownership participation and will leverage banking relationships of both companies.
The joint venture will have an open model to ensure interoperability among the banked and unbanked segments, and serve as a bridge between the financial and telecommunications sectors. It will seek to provide 87 million current and potential Movistar customers with mobile payment (m-payment) services that will be linked to a mobile wallet or prepaid account including money transfers, mobile airtime reload, bill payment and retail purchases, among others. In addition, some of these services such as receiving remittances may also benefit 200 million Movistar and non-Movistar mobile subscribers in the 12 Latin America markets included in the joint venture.
This initiative is a step toward achieving financial inclusion for the underserved in Latin America – positively impacting its economic development. Aside from offering convenience and security, the range of mobile financial solutions to be offered will be the most complete to date and widely accessible to all, regardless of their access to banking services.
Through this initiative, it is expected that acceptance of electronic payments (e-payments) will be expanded to enable what are today predominantly cash-based merchant locations and micro-businesses such as taxis, street vendors, among others, to accept m-payments.
As part of its objectives, the joint venture will seek to promote the financial inclusion of a high percentage of the Latin American population with difficult or no access to traditional banking systems for reasons such as low income or living in remote areas – to potentially have a positive impact to the economic development of the region.
Market research and customer surveys in Latin America both confirm that mobile phones are perceived to be convenient and safe, and therefore, an appropriate tool for financial transactions. It is also estimated that by 2014 mobile financial transactions will reach approximately US$63bn in Latin America.