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Friday, 06 September 2013 14:11

 
Latin America Ready to Bet Big on Mobile Money
Tuesday, 27 August 2013 14:10

Living and working in a cash-free market is becoming an increasingly likely reality for many people all across the globe. Credit card purchasing is pushing cash aside in the US and Europe, as well as online banking and bill payments for basic transactions, goods, and services. But how does this trickle down to places like Latin America, where cash is king, yet economies are still growing at a rapid pace? In traditionally cash-based economies, there are millions of people who don’t keep their money in a bank. Whether it’s due to past financial crises, or lack of enough funds to maintain the required minimum balance, millions of people have been left behind in the e-commerce revolution. This is mostly due to the simple reason that they don’t have a bank account.

Believe it or not, over 60% of people living in Latin America are classified as “Unbanked”, meaning that they have no bank account, and have to rely entirely on cash. Historically, this has excluded them from a large sector of their own growing markets. That’s all about to change, as new technology is bringing us the ability to make even the smallest purchases and transactions via a few clicks from our cellphones. This technology is known as “Mobile Money”, and it’s primed to take over the e-commerce market in Latin America.

How Does Mobile Money Work?

Mobile Money works by transforming your cellphone into what’s called an “e-wallet”, or a virtual account that even the smallest purchases can be made by. Rather than carrying cash, the user simply has to charge money to a mobile account, which can then be exchanged with other mobile users connected to the same service. Users, in this case, could be anyone from a family member, to a supermarket, to your cable provider. The possibilities are limitless, as long as the user or business is subscribed to the service.

This will have huge potential in Latin America, as smartphone usage is set to rise drastically in the next two years, making Mobile Money a viable option for a majority of the region’s population. Most of this potential market success is based on a mobile technology known as NFC, or “Near Field Communication”.  NFC allows smartphone users to exchange data, or in this case funds, from one user to the next by being in close vicinity, or physically tapping the phones together.

Spain’s Telefonica, Visa, CaixaBank, and Gemalto are currently on the front lines of the latest release in NFC technology, which will, by our bet, be the impetus for a major wave of Mobile Money into the LatAm market within the next year or so. One of the best things about Mobile Money is you don’t need a bank account to access it. This gives it massive market opportunities in all parts of the developing world, where businesses will now have another viable payment option, safer than cash, and nearly as readily available. With smartphone use outgrowing bank usage at a rapid pace, it’s the next logical step in further capitalizing on the growing purchasing power in the region.

Why Latin America? Why Now?

If its success in Africa and Asia has taught us anything, it’s that Mobile Money is ideal for developing countries’ economies. As we mentioned before, in Latin America, economic growth is outpacing the rate at which people are putting their money in banks. In a lot of cases, people just don’t see the need to open a bank account. However, with a booming cellular market, and a strong base of experienced mobile users, introducing Mobile Money should be much easier than it would be in the US or Europe. With a deep mobile culture already set in place, convincing people to switch from cash to e-purchases shouldn’t be too much of a stretch. At the very least, it presents much less of a challenge than converting them to a banking culture.

We believe that introducing Mobile Money into the Latin American market will have remarkable success. And the timing seems to be perfect, as access to this new technology is on the cusp of breaking wide open. Changing the cultural usage of cash, and de-stigmatizing financial institutions may not happen overnight, but it will happen, and the region is primed and ready. From a coffee in Colombia from your cellphone, to banking in Buenos Aires from your Blackberry, don’t be surprised to see Mobile Money in action in the next 12-18 months. Mobile Money is about to make its move, and the timing for this region is right, right now.

 
How to Start a Community Currency Barter System
Friday, 16 August 2013 14:50

By Dan Kukulka, Ph.D. (via MotherEarthNews.com)

Barter is nothing new. Some people have always traded goods and services instead of buying the things they need. Today, with high taxes and a deepening depression, many modern Americans are rechecking barter opportunities. Paul Glover’s article “The Ultimate Barter” demonstrated one system: trading hours of labor for a homemade currency, which is tradable for another participant’s own service hours. As a MOTHER reader, I’ve benefited from several tips over the years, and I’d like to give something back. So I thought I’d share additional ideas on setting up community bartering systems based on my own experience.

First of all, most barter systems take one of two forms. Some systems trade through a headquarters, where each member has a “house” account-updated with “debits” and “credits” from trades. Other systems, such as Glover’s, print and utilize their own currency—eliminating the need for a central agency.

Both have advantages and disadvantages. The centralized system is expensive to operate but is more secure than a currency system. However, the security problem is the same as Uncle Sam’s: counterfeiting. If the barter currency becomes valuable, enterprising individuals will no doubt attempt to counterfeit. Modern photocopiers can even produce colored documents by laser technology, making the problem an even larger threat.

Many people view homemade currencies with suspicion. However, the laws that govern an auxiliary currency are not hostile. Remember, the money in your pocket is your private property, to do with as you wish. Contrary to popular belief, it’s not against any law to spindle, fold, or mutilate currency—as long as no fraud is intended fraudulent. The law simply requires that imitation federal currency be 25% smaller or 1 1/2 larger than the original size.

In Myrtle Beach, SC, we’ve created a homemade currency called “Beach Bucks.” The purpose of this currency is to invite vacationers to stay an extra day. Typical visitors stay an average of 4.2 days. A hotel owner who persuades guests to stay an extra day can significantly increase profits. So hoteliers try to keep guests by offering the extra night at a reduced rate and offering 40 Beach Bucks. Each Buck is equivalent to $1, and is exchangeable with cash at a few of the stores in town. All totaled, you’re not spending extra money. You’re getting an extra day at the beach for free. By next year, we hope several more local stores will start accepting these bills.

Since local hotels average approximately 66% occupancy, extra room nights sold bring in profits. The value of Beach Bucks makes a difference helping vacationers accept the offer. If they don’t bring enough value to a vacationer, there is little chance of extending the visit. For starters, we insist that discount offers made for Beach Bucks exceed all other advertising deals available. Also, they are aimed at our particular market. The Myrtle Beach economy earns $2 billion per year of tourist money, so there’s a definite use for a currency aimed at the vacation industry.

Here’s my first tip. When planning a new barter system, decide whether it will be reserved for residents or whether it will be open to wider participation. The wider the trading range, the more attractive is the system. However, remember that the work does increase considerably with the number of participants. Here are some other suggestions to get you started:

•Decide whether you want a centralized headquarters. If so, make plans to reserve a portion (say 10%) of all trades as income to the home office. Otherwise, your operation will have to fold as it becomes successful—The workload will become too heavy for volunteers to maintain and a paid staff will be a must.
• If you opt for a local currency, design one as elegantly as you like. Be careful of counterfeiting opportunities. Consider printing small bills only. Counterfeiters rarely print U.S. currency in $1 denominations. It’s more work than it’s worth.
• Use an expiration date on currency you print to keep the currency changing hands. For vitality, the currency must be visible in the marketplace.
•Add a registration area to your currency. This way, you can get names and addresses of the first user of each bill. Also, valuable mailing lists come from knowing who used your currency