Telefónica and MasterCard dance to the beat of Samba.
Posted: November 24th, 2011 | viewed: (1,718) | Comments: ( 0 ) | Topic: Blog Post | Region: Latin America
Earlier this year, Telefonica announced it was working with MasterCard to provide mobile financial services to its 87 million customers across 12 Latin American markets. Today, the first of these partnerships comes into being with the formal announcement of the creation of a joint venture to offer mobile financial services for 65 million banked and unbanked Vivo consumers in Brazil. Vivo is Telefónica’s largest operation in terms of customer numbers.
While this JV is still subject to regulatory approval, their plan is to launch an m-wallet allowing Vivo costumers to make mobile payments as well as P2P, bill payments, and airtime and online purchases. (Brazil’s has 81 million online users and its online market grew 18% in the last year). The service hopes to promote financial inclusion by allowing operations between banked and unbanked consumers and fostering the acceptance of mobile payments in locations that traditionally have only accepted cash transactions, such as taxis and delivery services as well as direct sales such as door-to-door transactions.
Brazil is already seen by many as a global leader in branchless banking – its banks have created wide-reaching branchless channels that use cards and point-of-sale (POS) devices at various retail locations.[1] This move is expected to complement the existing agent network infrastructure which has already been successful at bringing financial services to a large portion of the population.
Prior to this announcement, Vivo had already ventured into the field of mobile payments for banked customers. In 2010, Itau (one of Brazil’s biggest banks), Redecard and Vivo were the first companies to adopt a payments platform, created through a joint venture between MasterCard and Smart Hub from the Philippines. This service works by storing a MasterCard cardholder’s credit or debit card number in a SIM card or chip device to enable customers to make retail purchases or reload prepaid phone balances. About 1,000 merchants and 30,000 customers participated in the pilot in Sao Jose dos Campos, a suburb of Sao Paulo.
It is still not clear how this existing product will complement the newly created venture. What is clear is that the rules of the game are changing in the Brazilian mobile payments domain. During the last couple of years, Brazilian MNOS have not been under pressure to develop more value-added services due largely to positive growth forecasts. According to Wireless Intelligence, it is expected that, by 2013, there will be 50 million new connections bringing up the number of total connections to 280 million. So far banks have been driving innovation in mobile payments and branchless banking, but Mastercard and Telefonica’s formal arrival into the mobile money sphere marks a new chapter.
Moreover, as we discussed here a couple of weeks ago, Paggo, the mobile credit card company which spun out of Oi and is now co-owned by Cielo and Banco do Brasil is planning to launch a full service m-wallet by integrating it to over a million acquiring points of the Cielo network (owned by Bradesco and Banco do Brasil).
[1] http://www.cgap.org/gm/document-1.9.50801/CGAP_Technology_Program_Country_Note_Brazil_Public_Rev.pdf
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