Mexican Issuers Leverages Canadian Gift Card Software

ePaynews.com

Jun 20 2008 : Mexico’s Mercadotecnia, Ideas y Tecnologia (MIT) is launching a gift card program using software developed by Toronto-based Smart Processing Solutions.

MIT will use the SmartIssuerPro system to provide gift cards which will be issued by its clients.SmartIssuerPro enables independent sales organizations (ISOs), financial institutions, retailers and processors to issue and manage prepaid, debit, gift, and loyalty card programs in-house.MIT provides transaction switching services for Mexican banks, retailers and payment networks.

Smart Processing Solutions provides processing and switching software for banks, ISOs, processors, acquirers and retailers. In Canada, its software is used to drive a network of around 11,000 non-bank ATMs.

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Anticipated Demand for Prepaid Cards among Latin America Unbanked

Paynews.com

Jun 17 2008

By 2015, 324 million unbanked Latin American consumers could have general-purpose prepaid cards, according to a study by NovoPayment.

The Miami, Florida- and Caracas, Venezuela-based firm develops prepaid card programs for the unbanked in Latin America.

NovoPayment says that by 2015, annual general-purpose prepaid card spending by unbanked Latin American consumers could reach US$214 billion a year. Prepaid cards will bring access to point-of-sale, ATM, mobile and online card transactions to consumers who today rely almost exclusively on cash, NovoPayment says.

The study by NovoPayments covers 15 countries across Latin America including Argentina, Brazil, Chile, Colombia, Guatemala, and Venezuela. NovoPayment says that Brazil, followed by Mexico, will be the biggest general-purpose prepaid card market in the region by 2015.

In Brazil, there will be 109.9 million general-purpose prepaid cards in 2015, accounting for US$22.15 billion of spending, NovoPayment says. In Mexico, there will be 64 million general-purpose prepaid cards in 2015, accounting for US$54.34 billion of spending.

“Our study discovered a significant number of consumers with the income, access to infrastructure, and spending behavior to be viable users of prepaid general-purpose cards,” says NovoPayment CEO Anabel Perez. “Around 57 percent of the Latin American population has the need, the capacity, the means, and the necessary economic and social incentives to warrant prepaid cards.”

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The Ethics of the Bottom of the Pyramid

Hat Tip: World Bank

It looks like Ethical Corporation has caught on to the ethics of serving the bottom of the pyramid. An article in their most recent newsletter discusses opportunities in the vast bottom of the pyramid market in Latin America. About 360 million people in Latin America fit into this category. So far, local companies have left multinationals in the dust:

A third noteworthy trend is the leadership of national companies over their international peers. Micro-insurance firm Paralife in Mexico, Peruvian financial intermediary Cajasur and many of the other high performers in the index are local firms. With the bulk of their local market being low-income consumers, such firms have learned to search out opportunities among the “majority” by default.

Multinational companies, by contrast, often lack the experience, the local relationships, the market understanding and often the vision to trouble themselves with poor customers. Yahoo, Microsoft and PepsiCo feature among the big-brand laggards in the index.

What's it going to take for the multinationals to catch on?

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Boycott protests Western Union fees

By David Milstead,
Rocky Mountain News
September 14, 2007

Western Union has spent much of 2007 worrying that some of its customers have stopped sending money for fear of deportation.

Now, an immigration-advocacy group is urging the transmitter's customers to stay away for a different reason: The company's prices are so high, the group says, they're exploitative.
The Transnational Institute for Grassroots Research and Action, an Oakland, Calif.-based group, is launching a boycott. The group says Western Union's fees are too high and it doesn't reinvest enough in the communities it serves.

The boycott announcement comes just as Douglas County- based Western Union announced a new, five-year, $50 million charitable-giving program called "Our World, Our Family."

The program includes scholarships for children in two-country families and immigration advocacy. It follows the company's earlier five-year, $40 million program of giving.

"We believe our level of giving is comparable with others in the industry," said spokesman Daniel Diaz. "We strongly believe our model of contributing to communities is working."

Francis Calpotura, founder of the boycott group, argues that the charitable giving is small in relation to the company's size, particularly when its fees "come from families without a lot to begin with."

Western Union's pricing has been a sore point before. The company faced a number of lawsuits in the 1990s that alleged consumers were misled by the company's undisclosed profits on foreign currency exchange. They were settled in December 2000, and the establishment of the Western Union Foundation was part of the deal.

There's no question the company's prices are higher than its competitors', as the company positions itself as having an unparalleled branch network: 300,000 agents worldwide, or as many as the next eight largest money transmitters combined.

Competition on certain transmitting "corridors," particularly to Mexico, has been intense in the past several years, and Western Union reduced prices to narrow the distance between it and other companies. Still, said Gwenn Bezard, research director at consulting firm The Aite Group, Western Union's prices remain about 10 percent to 15 percent above closest competitor MoneyGram.

"To an extent, you can argue it's too expensive," Bezard said. "But there aren't too many good alternatives."

Remittances, Free Trade and Cross-Border Banking

From AOL Money and Finance via PR Newswire.

DALLAS, Aug. 20 /PRNewswire/ -- Remittances to Mexico, free trade and cross-border banking are the focus of the Federal Reserve Bank of Dallas' latest issue of Southwest Economy. Find the July/August issue online at http://www.dallasfed.org . Lower money-transfer costs and better measurement techniques likely explain the post-2000 growth in remittances from the United States to Mexico, according to Dallas Fed assistant economists Jesus Canas and Roberto Coronado and senior economist and policy adviser Pia Orrenius.

In "Explaining the Increase in Remittances to Mexico," the authors assert that the growth in the Mexican migrant population and their income alone can't account for the increase in remittances.

"Real remittances grew 170 percent from 2000 to 2005, but in the U.S., the Mexican-born population grew only 20 percent," they write.

Instead, they find that more migrants are turning to formal channels to send remittances due to reduced fees and that the Banco de Mexico has modernized procedures for collecting and recording remittance data.

"Spurred by declining costs for both senders and receivers, migrants increasingly have been transmitting remittances through formal channels rather than informal channels, such as carrying cash back home," according to the authors.

Many Americans get only the protectionist viewpoint on free trade, says Blake Hastings in this issue's "On the Record" conversation. "They rarely hear how protectionism distorts the economy, leads to higher prices, breeds mediocrity in service and product quality, and reduces variety," says Hastings, vice president in charge of the Dallas Fed's San Antonio Branch and former executive director of the Free Trade Alliance in San Antonio.

Hastings points out that South Texas cities, including San Antonio and McAllen, are reaching out to China, Brazil, Canada and Europe for trade opportunities. "All these communities are learning that you can't just wait for trade to come to you," he says.

In "Banking Industry Evolution Along the Texas-Mexico Border," economic analyst Joaquin Lopez and senior economist and policy adviser Keith Phillips review presentations from a recent Dallas Fed conference, "Cross-Border Banking." They report that as opportunities for banking increase along the border, the divide between U.S. and Mexican financial systems will continue to fade.

Speakers at the conference included Dallas Fed international financial analyst Edward Skelton, who said that explosive growth in the securitization and mortgage market in Mexico will boost the nation's economy by encouraging higher-quality housing, increased savings and greater wealth creation. SOURCE Federal Reserve Bank of Dallas

The Growing Remittance Market

The remittance market is growing around the world. In the United States, the remittance market is usually associated with the southwestern border states with Mexico.

As seen in the article published by the Federal Reserve Bank of Atlanta, four of the top ten U.S. states where remittances originate are in the southeastern United States.

Banks are interested in building infrastructure and knowhow but there are still many gaps which IPM (International Personnel Management, LLC) is here to fill.

Migration Phenomenon Beyond the United States

There are immigration trends throughout the Americas beyond the immigration of Mexicans to the United States.

According to a study* conducted by the Multilateral Investment Fund (MIF), "there are now significant communities of Bolivian migrants in Argentina, Nicaraguan migrants in Costa Rica, Guatemalans in Mexico, Peruvians in Chile, and Haitians in the Dominican Republic."

The MIF was formed to fund projects that stimulate the economies of Latin America and the Caribbean. There are numerous transactional opportunities beyond the United States/Mexico market.

*study titled Sending Money Home; Remittances as a Development Tool in Latin America and the Caribbean