Home Global-ICTGlobal-ICT 2013 Financial inclusion for 70 million mobile users in Mexico

Financial inclusion for 70 million mobile users in Mexico

by david.nunes
Daniel Hajj AboumradIssue:Global 2013
Article no.:8
Topic:Financial inclusion for 70 million mobile users in Mexico
Author:Daniel Hajj Aboumrad
Organisation:América Móvil
PDF size:385KB

About author

Mr. Daniel Hajj Aboumrad served in the Carso Group companies: General Manager of BIMEX, Dulces y Chocolates LUXUS, Artes Gráficas Unidas, Galas de México, Euzkadi General Tire..

He has been the Chief Executive Officer of America Movil since 2000.

Mr. Hajj Aboumrad has a Business Administration Degree, from Universidad Anáhuac (Mexico).

Article abstract

Financial inclusion is an important stepping stone toward the improvement of social well-being and a competitive economy. Mobile money is an engine for economic inclusion, and the growing use of mobile devices favors the generalization of solutions

Full Article

A key element for modernization and greater societal equality is the availability of effective financial instruments for both the corporate world and the population at large.

Financial inclusion is an important stepping stone toward the improvement of social well-being and a competitive economy. However, according to World Bank data, a substantial percentage of Mexico’s population over the age of 15 does not maintain an account with a financial institution. Thus, Mexico faces a great challenge: how can we expand financial services to make them available to all the population?

Mexico’s mobile network provides an ideal means to address this issue, since its market penetration largely exceeds that of the banking sector. The estimated ratio of banking customers to mobile subscribers among Mexico’s adult population is 1:3 or 4.

That is why Telcel, America Movil’s Mexican subsidiary, decided to create the first mass service for the delivery and receipt of payments via mobile handsets. We entered the business with two top-rated financial groups: Citigroup-owned Banamex, Mexico’s largest bank, and Inbursa, which forms part of one of the largest business conglomerates in Latin America.

In so doing, we have succeeded in combining banking and telecommunications – two technologically sophisticated, far reaching systems – to speed-up the adoption of this groundbreaking service in Mexico. On their part, Mexican financial authorities contributed with the adaptation of the regulatory framework, recognizing that this service will foster the country’s development.

Thus, we face the challenge of making financial services available to as many individuals as possible, while satisfying two conditions: ease of use and low technical requirements. Reaching the masses is achieved through Telcel’s involvement: Telcel’s mobile and retail network reaches more than 185,000 towns throughout the country, and at the end of March 2013, it had 71.2 million subscribers.


Following joint efforts as to technical and operating definitions, Transfer was launched in the market in April 2012, achieving the desired simplicity: with one telephone call, any customer can open an account linked to his or her mobile line without the need of having a pre-existing bank account, and can then perform the most common and useful banking transactions:
• Sending and receiving money transfers;
• Recharging their pre-paid mobile balances;
• Making payments in retail outlets;
• Transferring funds to other bank accounts;
• Performing balance and transaction inquiries.

These transactions are executed on a real-time basis, 24 hours a day, 365 days per year, thanks to the fact that our systems are linked online to those of our banking partners, thereby creating a new digital ecosystem where the telecommunications infrastructure plays a key role.

Meeting our objective for simplicity, a majority of these transactions can be performed from mobile handsets via SMS or through a mobile app. There is also the option of supplementing the service with a debit card and other traditional banking features, including access to bank branches, electronic banking and, most notably, ATM withdrawals using the mobile handset, without need for a card.

We well know the technological possibilities offered by mobile networks and terminals: ubiquitous communication, processing power and safe transactions. We also contribute to this project the reach of our retail network: our customer service centers operate as bank correspondents, opening accounts for our customers and receiving their deposits.

A project of this nature has enormous potential to positively impact our society, since for millions of individuals Transfer is not only a simple and convenient option to access formal financial services, but it is in many cases the only option available.

Less-favored segments (including youngsters and individuals without formal employment) can use their mobile handsets as they would a debit card, with the ability to safe-keep their money and make payments and withdrawals, all the while protected by a safety framework that combines a physical element (the mobile handset in lieu of a card) and a password or PIN selected by the customer.

For small retail outlets, Transfer represents an opportunity for a means of payment other than cash, as customers can pay for their purchases by sending an SMS to the retailer’s mobile number. In addition, the electronic cash flow serves as an engine for entrepreneurship and to provide rural regions with business and service models that would not be able to function based solely on cash.

Family remittances

There is also another area where Transfer will have a significant impact: the so-called family remittances, whether domestic or international, since millions of people who have emigrated in search of work need to regularly send money to their families at home. Within Mexico, Transfer is already available to senders and recipients with a cost to the sender equal to three percent of the current average cost, according to a joint study published by the Center for Latin American Monetary Studies (CEMLA), and Mexico’s National Banking and Securities Commission (CNBV).(2) From the U.S., immigrants will be able to make deposits to their families even if there is no nearby bank branch. To put into perspective the impact of this feature, as recently as in 2011 there were 33.6 million individuals of Mexican origin living north of the border,(3) and a large percentage of them regularly send money to their families in Mexico.

To make cash withdrawals, a customer sends an instruction via SMS and the system generates a return message with a numeric password that the customer can submit to a bank teller or enter into an ATM.

It is essential to guarantee safety and reliability, and Transfer has been approved by Mexico’s regulatory authority, the CNBV, and the customers’ money is subject to all the protections afforded by law to users of banking services in Mexico and is backed by Banamex and Inbursa. As with respect to technology, Transfer meets the standards for Digital Signature Services (DSS) and the PCI Security Standards Council.

Again, the social potential of Transfer centers on its minimal usage requirements: the mere fact that it is based on the transmission of SMS text messages, without need for an Internet connection, makes it available to any Mexican citizen. The only eligibility criteria to subscribe to Transfer is to have a Telcel line and handset, regardless of how basic the cell phone is.

Mobile money is an engine for economic inclusion, and the growing use of mobile devices favors the generalization of solutions to transform mobile devices into tools for sending and receiving money at low cost, on a routine and accessible basis.

The success of Transfer reveals the path toward its expansion into Latin America, as part of a regional program to foster development and the adoption of new technologies to service the population.

1. World Bank, http://datatopics.worldbank.org/financialinclusion/country/mexico
2. http://www.cemla-remesas.org/principios/pdf/mercadoderemesasmexico.pdf
3. United States Census Bureau http://www.census.gov/newsroom/releases/archives/facts_for_features_special_editions/cb13-ff12.html
4. http://www.telcel.com


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