Brazil brings mobile payments home
Brazil is to gain its first ever mobile payment service this month, with the launch of a joint service provided by Spanish and South American telecom firm Telefónica and MasterCard.
Available first in Sao Paulo and Belo Horizonte, the Zuum service will allow Brazilians to transfer money, buy credits for pre-paid mobile phones and pay bills with their mobile phone.
“Brazil is a country that loves and invests in technology and has a big number of people without access to financial services in the classes C/D/E, the so called unbanked population,” said Marcos Etchegoyen, president of Mobile Financial Services, the new company created by the joint venture. “Zuum arrives to meet this demand and to make easier the life of Brazilians.”
Mobile payments have already achieved considerable traction in emerging markets such as Kenya, where m-Pesa has 18 million users. Brazil has a population of 196.7 million, and 267.5 million mobile phone subscriptions, according to figures provided by the World Cellular Information Service.
Users sign up to Zuum by dialing *789# on their mobile. Joining is free and there is no maintenance fee for the account or the card; there is a single fixed cost to purchase the card, and transactions are charged small taxes that are reversed into bonus credits for the mobile phone. Users can also choose to receive a pre-paid card from MasterCard which is connected to the same pre-paid account, and can then be used to make purchases and withdraw cash from Cirrus ATMs.
“With Zuum it’s possible to do all this securely and with the convenience of having all these functions in a simple mobile phone, without the need to download apps, access the mobile internet, or own a smartphone”, said Etchegoyen.
Mobile payments are heralded by advocates as faster, more efficient and more secure than conventional cash or card transactions. They are also often invoked as a means to reach the ‘unbanked’ population, i.e. people who do not have a bank account. The percentage of Brazilians who do not use banking services is close to 40% according to IPEA, an economic think tank in Brazil, and 55% of employees in Brazil are paid in cash according to research from the Brazilian Central Bank. These figures suggest that in Brazil, the unbanked population currently stands at around 75 million, according to estimates provided by Banco Panamericano.
Other mobile payment services are also expected in Brazil imminently. Zong, a PayPal subsidiary started in 2008 by entrepreneur David Marcus, is currently seeking to bring Brazilian carriers Vivo, TIM, BRT, Claro and Oi onboard for its own mobile payment service in the country. Meanwhile, eFinance company Paggo is developing payment solutions with mobile operator Oi and the national bank, Banco do Brasil.
MFS has said that the Zuum service will be expanded beyond Sao Paulo region and Belo Horizonte to reach the rest of Brazil by 2014.