Pocket-able Banking Coming to Mexico’s Underserved
Banorte, Mexico’s third largest bank and Rev Worldwide, a Texas-based company specializing in payment solutions, have partnered to create a mobile-based payment solution program called MiFon. MiFon pairs a debit card with a Banorte deposit account and is compatible with a variety of cell phone carriers. This serviceprovides a much-needed and practical solution for Mexicans who have limited access to banking and financial services.
In developed countries, bank accounts are so common they are often taken for granted. For example, according to the Federal Reserve Bank of Dallas, over 90% of all households in the U.S. have a bank account. However in Mexico, where the mean income is about one third of that in the US (CIAFactbook),less than 25% of Mexicans have even a checking account.
One of the main factors that prevents the average Mexican from having a bank account is distance. Out of Mexico’s 2,439 municipalities, more than half do not contain private commercial banks or even government-owned development banks.
Something as simple as a bank account makes an incredible financial difference for both individuals and businesses.For example, cashing paychecks without a bank account can cost up to 10% of one’s income. Also, paying bills without a checking account takes more time and is riskier, as it entails transporting large quantities of money. Entrepreneurs and small businesses who have to manage their finances without a bank have operating costs that are up to 15% higher. Furthermore, transactions made via cash are about five times more expensive than those made via checks.
Because of the prevalence of mobile phones in Mexico, a banking system that utilizes this technology would be very accessible. According to the CIA World Factbook, in 2009 only one in five people in Mexico had a fixed phone line, but 75% of the population had a mobile phone. These numbers are only growing. In fact, Mexico has the 11th highest number of cell phones in the world.
SOURCE: CIA World Factbook
According to the CEO of Rev Worldwide Roy Sosa, “MiFon represents our company’s mission to empower customers worldwide with the affordable and relevant financial services they need.”
MiFonaccounts can be opened without once setting foot inside a bank, making them even more accessible to more people. The MasterCard debit card is accepted by over 30 million merchants and can be used to withdraw money from around 6,200 Banorte ATMs. Additionally, customers can transfer money between accounts via texts messages, which are already widely used in Mexico. Additional features, such as mobile top-ups, will also be available soon. The first stage of this program will be launched jointly in Oaxaca with Telecomm Telegrafos, a Mexican financial and telecommunications company.
MiFon fills a real need in Mexico as it increases accessibility to much-needed banking services via already widely-used cell phones. Through the marriage of different technologies, solutions such as these are sure to generate a large impact on people’s lives.
Byrd can be reached at byrd.bannick(at)gmail.com
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