The Mexican central bank is to launch a smartphone payments system, and has instructed the country’s banks to join up by the time the system goes live at the end of September.
Banxico’s new platform, known as CoDi, is designed to reduce the use of cash and draw people into the financial system. “If we consider that the number of people [in Mexico] with smartphones is twice that of those who have a bank account, it’s quite clear that CoDi could have an enormous impact, by integrating a whole universe of potential clients into the financial sector,” said Alejandro Díaz de León, governor of the Mexican monetary authority.
CoDi, which has been in testing since April, will allow goods and services to be purchased using a smartphone associated with the user’s bank. Transactions are initiated via text message, with the money paid on confirmation by the recipient. There is no commission fee, says Banxico, which hopes the system’s speed and efficiency will attract customers.
Small business bonus
Banxico is targeting small and medium-sized businesses, which often conduct high volumes of small transactions: 95% of all payments of up to 500 Mexican pesos (US$26) are paid in cash, according to the country’s statistics institute Inegi. Vendors may ask customers to scan QR codes at the point of sale, send text messages to their customers, or use NFC technology – which requires the seller’s and buyer’s smartphones to be in the same location. In each case, buyers must give their specific approval for the payment to be made.
By the end of last month, 12 of Mexico’s biggest financial entities had signed up for experimental trials, with on-the-ground testing of the service scheduled to begin toward the end of July. All remaining Mexican banks operating 3000 accounts or more are required to join the initiative before September.
For now the focus remains on the private sector, although authorities recognise the service’s potential in public administration.”CoDi may be a useful vehicle for extending the reach of social programmes in places with low financial penetration,” said Díaz de León at the service’s unveiling earlier this year.”