First, Sr. Pago brought mobile point of sale (mPOS) to Mexico. Now, with the help of MasterCard MA, it plans to bring banking to the ‘unbanked.’
The Sr. Pago Card System, consisting of a smartphone-based chip credit card reader and reloadable MasterCard debit card, the first system of its kind in the Americas, launches Tuesday in Mexico.
Sr. Pago CEO, Pablo Gonzalez Vargas, told Benzinga that the company has a clear vision: “To revolutionize the informal cash-based financial ecosystem that comprises much of the economy of Mexico.”
That ecosystem is reflected in a population that has become the 10th largest user of smartphones in the world and yet has what Sr. Pago calls a “Cash under the mattress culture.” More than 75 million people – about 60 percent of the population of Mexico - remain unbanked.
Vargas explained, “In Mexico as well as numerous other countries, an informal cash-based financial ecosystem comprises much of the national economy. For a variety of reasons, people are either forced or chose to be ‘unbanked.’”
The reasons for the large unbanked population, Vargas said, include high banking fees, a difficult and lengthy account application process, tax repercussions and the fact that pawn shops and micro lending companies make up a large part of the financial landscape.
The huge unbanked population runs the gamut and includes laborers, taxi drivers, middle-class professionals and many small businesses. The independent sales force in Mexico is also very large. According to Vargas, the Mexican economy supports more than two million multilevel marketing sales people alone, most of them unbanked.
The Sr. Pago payment system connects to any smartphone or tablet through an app that manages transactions. Unbanked individuals and small businesses can accept credit card payments with the system; the payments are then transferred to a linked MasterCard debit card.
The Sr. Pago card, Vargas said, will be offered at Best Buy and other large retailers throughout Mexico and online via the Sr. Pago website. It will cost $50 (US) with an initial swipe fee of 3.59 percent per transaction.
Vargas said that future plans include offering micro financing or a line of credit, based on the individual’s debit card balance history. This is due to recent changes to banking law in Mexico that make it possible for unbanked individuals to receive many of the benefits of a bank account even though they are not in the banking system formally.
The company also has plans to expand into much of the rest of Latin America where large unbanked populations exist.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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