In the past few years, Peru has been identified as a pioneer in financial inclusion due to its regulatory framework and policy formation. The Peruvian government considers financial inclusion as a key driver for growth in the economy and thus has put financial inclusion as one of its priority under its socio-economic inclusion objective. This path shall not only lead to financial inclusion but also eradication of poverty and reduction of the income inequality.
According to the study, ‘Payments Landscape In Peru: Opportunities And Risks To 2021’, To promote safe and efficient payment mechanism, the multi sector committee for financial inclusion approved the plan of National Strategy of Financial Inclusion containing methodologies and mechanisms that shall be followed.
Traditionally, financial inclusion in Peru has been significantly low due to history of economic instability characterized by high inflation which started in the late 70s and lasted for nearly two decades. The effect of this instability can be witnessed in the present time when only a small fraction of the population have bank accounts and even fewer people who save their money in forms of financial instruments. However, stability has been witnessed in the recent times requiring government to further promote the concept of cards and alternative payment solutions.
In accordance with the government initiative to promote financial inclusion, it launched a fully interoperable payment platform BiM in coordination with Bankers’ Association Peru, the International Finance Corporation and Better than Cash Alliance. This initiative was taken via a public private partnership with a new legal entity Modelu Peru. The MiB is an interoperable white label retail payment product which aims to allow multi FSP interoperability for financial services. Modelu Peru’s technology has been deisgned by Ericsson whih aims to bring 34 financial institutions to connect to a single digital payment platform. The service is available is available via three telecom networks and can be accessed via any basic mobile device. Mib can be used for a variety of services like for opening a bank account, transfer of fund or make utility payments. With huge number of users using this ervice to make digital payments, MiB is increasing the number of users every month.
In 2015, mobile operator, Movistar and Mastercard partnered to launch a digital payment service called Tu Dinero Movil. The service is exclusive to Movistar’s customers enabling them to conduct digital transaction such as payments at Mastercard affiliated merchants and mobile recharges. E commerce segment is currently booming in Peru. Medium and Large enterprises are launching online stores and marketplaces. In April 2018, online shopping mall, Lumnigo commenced operations offering variety range of products and services. These e – malls are a one stop for millions of small retailers which enables them to expand their region. Some products that are available one these e – malls are furniture, clothing, fashion apparels, medicines, digital devices that too from various websites available on one platform. To benefit from this growth in the E commerce segment, providers are coming up with new services. For instance Visa offers Visa Checkout that allow users to make convenient payments via their username and password and similarly, PayPal offers One Touch for faster checkout.
Some of the players in digital payment space are Banco de Credito del Peru, BBVA Continental Scotiabank, Interbank, Banco Falabella, Banco Ripley, Banco Cencosud, Banco Financiero, Visa, Mastercard, American Express and Diners Club
The growth prospects for this sector are bright in the future provided the private users are able to build their faith in the digital transaction model. This trust can be generated via constant government support and initiatives that lead to higher acceptability in the long run.
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Ankur Gupta, Head Marketing & Communications