Press Release:
Telefónica and MasterCard create a joint venture to offer mobile financial solutions in Latin America
The new company will offer mobile financial solutions to Movistar’s 87 million customers in 12 countries in the region • As part of this agreement, Movistar® mobile subscribers in Latin America will be able to use their mobile phones for person to person money transfers, bill payment, mobile airtime reload and retail purchases, among other services.
• This initiative is a step toward achieving financial inclusion for the underserved in Latin America - positively impacting its economic development. • New company will provide a better alternative to paying with cash for both consumers and merchants, combined with the convenience of mobility.
Telefónica (NYSE:TEF) and MasterCard (NYSE:MA) announced today a joint venture to lead the development of mobile financial solutions in 12 countries in Latin America where Telefónica is present with the Movistar® brand. This is a first-of-a-kind initiative where a payments and telecommunications company partner to create a new company focused on integrating the convenience and accessibility provided by mobile phones with a set of financial solutions that will work with existing electronic payment systems.
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.
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.
This initiative is a step toward achieving financial inclusion for the underserved in Latin America - positively impacting its economic development.
Aside from offering convenience and security, the range of mobile financial solutions to be offered will be the most complete to date and widely accessible to all, regardless of their access to banking services.
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 US $63 billion in Latin America.
'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.'
'By offering mobile financial solutions, we are fully responding to the demands of the population in Latin America that trusts in their mobile phone to conduct financial operations,' said Joaquin Mata, Global Head of Financial Services for Telefónica. 'This joint venture places Telefónica in a solid position to lead the development of mobile financial solutions in Latin America'.
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