The last few days have been big in terms of mobile payments in Brazil as the government takes the very first steps towards regulating the model, with a new provisional act including a framework for products and services enforced yesterday (21).
According to data from the Brazilian Ministry of Communications, it is expected that the number of mobile phone lines able to make payments will reach 130 million in two years' time. Currently, there are approximately 260 million mobile phone lines in operation across the country.
The Brazilian government is interested in facilitating the growth of "mobile wallet" services to provide access to banking to people on lower incomes and promote financial inclusion - something along the lines of what is already being done in African countries such as Kenya for quite some time. And, of course, foster a model that could bring endless business opportunities to existing and new financial services players.
The Brazilian Central Bank (BC) will have 180 days to produce the practical regulation roadmap and establish how the existing mobile payment providers will adhere to the framework. BC representatives have been quoted in the Brazilian press as saying that one of the main concerns include interoperability - it is crucial that all telcos and banks are able to provide services based on a common set of standards.
According to BC bosses, it is expected that m-payments will initially be mainly focused on transfers of cash between users of the service and then move on to retail transactions. At that stage, the government may even be a user of the technology - paying benefits via the system, for example.
As rules become clearer for m-payments, it is expected that large organizations such as banks will leverage on their existing mobile services to provide options to those without bank accounts - seems like a perfect opportunity to attract customers that may end up taking up more sophisticated products in future.
But it shouldn't take long for other players to join in the party. A case in point is last week's launch of Zuum, the m-payments offering of Telefónica-MasterCard's joint venture Mobile Financial Service. The product is focused on those without bank accounts and has a target to intermediate up to 600,000 transactions by the end of 2013.
The service will be available from november and will be delivered in partnership with Vivo - the largest mobile phone provider in Brazil - given the telco's penetration amongst consumers of lower incomes. Users will be able to pay bills and transfer up to R$ 2,700 ($1,317) per month.