MEXICO CITY -- As if wireless connections, global positioning systems and apps for everything under the sun weren't enough, cell phones in Mexico are adding another trick to the trade: cellular banking.
A new law permitting mobile banking services by cell phone went into effect here in August, swinging open the door to a massive new market for the banking and communications industries.
There are between 40 million and 50 million debit cards circulating in Mexico, according to Mexico's National Banking and Securities Commission (CNBV), but there are an estimated 90 million cell phone users.
Many of Mexico's 112 million people are out of the banking system's reach. The CNBV reports that for every 10,000 adults, just 4,023 possess a checking account. Historically, the issue has been a lack of infrastructure. There are fewer than two bank branches per 10,000 people nationally, and if the data is separated to show rural access to banks, it's half a bank branch per 10,000 people.
But cell phones are everywhere, from the hip enclaves of Mexico City to its toughest barrios, from farm towns to hard-to-reach communities in the mountains of the southern states of Guerrero and Oaxaca. The banking industry is chomping at the bit to get at the millions of people who own a cell phone but not a bank account.
Carlos López-Moctezuma, chief of staff for the CNBV, expects companies to start rolling out financial services products for cell phone users en masse starting in January. One new company dedicated to this emerging niche has already been formed.
América Móvil, Banamex, Citi and Banco Inbursa announced in October a joint venture called Transfer, which aims to offer banking services by mobile phone to a target market in Mexico and Latin America it pegs at more than 236 million consumers. The company is expected to begin offering services in early 2012.
The idea is that people "with limited resources begin to warm up to banks through this type of mobile payment system," said Banamex spokesman Gerardo Gregoire Crespo in an emailed response to questions. "Of course it will take some work, given the fear people have of technology, especially when it comes to money, just like was once the case with automatic teller machines. It's expected that there will be a period of adaptation to this service."
The Transfer venture expands the empire of Mexico's richest man—also the world's richest man, according to Forbes 2011 list of billionaires—Carlos Slim Helú. Slim owns both América Móvil, which provides cellular services in the U.S. and Mexico, plus 16 other countries in Latin America and the Caribbean, and Banco Inbursa, whose bank network serves 8 million clients in Mexico.
Transfer's financial services by cell may include opening a bank account, making deposits, transferring money between accounts and buying cell phone credit, among others, according to a statement.
The new law doesn't regulate pricing. Asked about protections for consumers, López-Moctezuma suggested that fees associated with mobile financial services will be lower than what Mexicans without bank accounts currently pay at money transfer services such as Western Union or Elektra, which charge up to 10 percent commission, he said.