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Amazon is reportedly in talks with the Mexican government to launch a free QR-code-based mobile payment system that enables online shopping, according to Reuters.
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The system, called CoDi — which we previously reported on before Amazon’s involvement was announced — is backed by Banco De Mexico, the country’s central bank, and is intended to give financial services access to unbanked customers, who account for more than half of Mexico’s population. The government plans to pilot the program this month and said it could implement the system relatively quickly.
Amazon could be instrumental in helping streamline both financial inclusion and e-commerce usage in Mexico.
- This service can allow the e-commerce market in Mexico to take off rapidly. The e-commerce market in Mexico has been largely inhibited by factors like low card penetration: Only 3.9% of retail sales were made online in Mexico last year, according to Euromonitor International. But this service can remedy that by bringing more Mexican consumers into the financial sector and enabling them to shop online. And it can complement Amazon’s previous efforts to enable unbanked customers in Mexico to shop online: Last year, Amazon launched a debit card in the region, called Amazon Rechargeable, in an effort to encourage consumers without bank accounts to shop on its website. The card can be loaded using cash at convenience stores throughout the country.
- This effort by the Mexican government can mirror results in other countries where high mobile penetration was leveraged to promote financial inclusion. Forty-two million consumers in Mexico are unbanked for a variety of reasons — including high fees from banks, which could make a free service extremely popular — and an estimated 90% of transactions are made in cash. Further, mobile penetration is at 55% in Mexico, which means the service could see results similar to other initiatives in countries where mobile phones were used to help streamline financial inclusion. For instance, China-based WeChat Pay and Alipay or M-Pesa in Kenya have successfully introduced services to their populations that became ubiquitous, including to unbanked consumers who didn’t otherwise have access to traditional financial services.
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See Also:
- Baby boomers and Gen Xers fuel Zelle
- Facebook is building its own cryptocurrency for real-time cross-border transfers
- Uber has rolled out its Uber Rewards loyalty program
SEE ALSO: THE PAYMENTS INDUSTRY ECOSYSTEM: The trend towards digital payments and key players moving markets
Source: Business Insider – feedback@businessinsider.com (Rachel Green)