Tuesday, June 03, 2014

Government seeks to expand mobile banking and create new entities for unbanked people

CRC put a limit on SMS price and introduced USSD for mobile operations, which moved US$111.5 million in 2013. Moreover, organizations dedicated to e-payments will be created.

In mid-April this year the Comisión de Regulación de las Comunicaciones, CRC (Commission on Communications Regulation) issued Resolution 4458, whereby it established, among other items, two measures which aim to expand the use of mobile banking. The first one was to put a limit of US$0.0052 for SMS used for mobile transactions, and the other one was the introduction for this segment of the USSD system, which is not much used in the country.

Speaking to Convergencialatina, CRC President, Pablo Marquez, explained that the objective of the regulator is to encourage the use of these systems, as they are those which are within the reach of most of the population having a regular cell phone. In contrast, other way allowing mobile banking, data, require a device with Internet access and a connection.

9,487,269 monetary transactions via cell  phone were made in Colombia in 2013, a 138.5% more than those recorded in 2012, according to a report by the Financial Supervisory Authority. The amount moved by such transactions last year reached US$111.5 million, 54.8% more than that recorded in the previous year.

The report also indicates that in 2013, two million people used a service like this. According to Marquez, currently that number is close to 3 million.

As for the banks, it appears that eleven of them had in 2013 a banking service. However, Bancolombia concentrated 55% of the monetary operations, and Banco Davivienda, 33%. It is noteworthy that the former has a mobile app for transactions, which already had 1.2 million downloads and has 520,000 active customers.

Finally, although its adoption is significant, mobile banking represents only 0.001% of the total operations. In addition, its average money transferred per transaction was in 2013 US$ 10.5, reflecting that it is used mostly for small transactions.

New financial institutions. In early May, Government submitted to Congress a bill for the creation of non-banking financial institutions, specifically dedicated to the management of electronic payment forms.

Pablo Marquez told Convergencialatina that the purpose of the document is to create a new figure of financial institution not having the same establishment requirements than a bank and that, therefore, may manage a number of limited but practical operations. Thus, it seeks to reach the unbanked with electronic services, whether mobile or not, similar to those offered by banks.

These organizations will allow transactions such as payments, transfers, money collections and savings accommodation. Withdrawals made by clients will also be exempt from paying the tax on financial transactions as long as they do not exceed US$943.

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