Government Plans Put Peru Ahead
Peru's government will launch mobile banking (m-banking) services by the end of 2013 as the Electronic Money Law (Ley de Dinero Electrónico) comes into effect. The law was passed in mid - January 2013 , with the government planning to use the service to promote social and financial inclusion. The service is being developed with regulators from the banking and communications sector. BMI believes the government - driven programme will help mark Peru out as a leading market for m-banking in Latin America.
Peruvians already have access to m-banking services in the form of mobile market leader Movistar 's Wanda service in partnership with MasterCard . The government - backed scheme looks beyond bill payments and prepaid account recharging . The government estimates around 65% of the Peruvian population lack access to formal banking services. With mobile penetration at 98% at the end of 2012, there is a clear path for bringing financial services to a greater share of the Peruvian population. While BMI notes that a high penetration rate hides a number of inactive subscribers as well as multiple SIM ownership, we believe the market will continue to grow and operator rural rollout plans will enable more Peruvians to acquire a mobile handset.
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For the operators, the m-banking service may act as a boost to subscriber growth, encouraging those that do not have a mobile connection to get one. One of the government plans is to distribute funds under subsidised social programmes such as Pensión 65 and Juntos using the m-banking system, saving the cost and time of travelling to another town to get access to funds.
The cooperation between the communications regulator Osiptel and the banking agency Superintendencia de Banca, Seguros y AFP (SBS) is a positive sign for the development of the Electronic Money Law. Where telecoms and IT services are increasingly used across more industries, there can be difficulties in defining regulatory responsibilities. This can lead to slow development and a lack of confidence on the part of consumers as to their rights and security. The latter point is particularly pertinent for the m-banking sector.
Peru's approach to making m-banking services available to all follows the highly successful M-Pesa product launched by Safaricom in Kenya. This sees electronic money stored on a subscriber's mobile phone, that can be used to make payments in retail outlets, transfer funds to friends and family and pay bills. Subscribers 'buy' e-money at an authorised retailer, meaning a formal bank account is not required, and it is stored on their account to be used as needed. By providing government backing, BMI believes confidence in the new service will be high. That is not to say that operator-led m-banking services have less success, but we believe a government programme with clear regulations from both industries involved in the product will help boost its success in Peru.
While regulation is a key part of m-banking success, there are a number of other hurdles to overcome. The cost of transactions needs to be kept affordable to ensure that subscribers are willing to make transfers and perform transactions on their e-money accounts. Congressman Fernando Andrade, who wrote the Electronic Money Law, points out that similar services in Latin America cost US$0.03 while the Peruvian service is set at US$0.06. BMI believes lower fees will help encourage more Peruvians to use the service. For subscribers set to receive e-money from social programmes, there needs to be a large enough network of retailers and companies that accept payments from the e-money platform in order to make the service worthwhile.
The developments have the potential to put Peru ahead of its regional peers in terms of m-banking developments. By driving the launch of services, Peru's government is clearly hoping for a boost to the economy as has been noted in other successful markets.