Telefonica and Mastercard to Wage a "War on Cash" in Latin America
Published on: 25th Jan 2011
Note -- this news article is more than a year old.
Telefonica is setting up a mobile banking joint venture with Mastercard that will offer services in the 12 Latin American countries where Telfonica operates its Movistar mobile network brand. The new company, managed independently, will have a 50 50 ownership participation and will leverage banking relationships of both companies, Telefonica's telecommunications assets and MasterCard's payment's expertise.
"MasterCard's commitment to foster financial inclusion across the globe makes the joint venture an exciting opportunity to provide accessible and affordable financial solutions to the millions of consumers in the Latin America region who have never been able to enjoy the benefits of electronic payments," said Richard Hartzell, President, MasterCard Latin America and Caribbean region.
"This initiative puts us at the forefront of mobile
payments in the region and arms us with the right artillery to strengthen our
war on cash." he added.
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 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. Through this initiative, it is expected that acceptance of electronic 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 mobile payments.
Financial inclusion and the development of society
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 USD63 billion in Latin America.