Prior to his company’s appearance at Innovation Project, Serge Elkiner, Cofounder and CEO of YellowPepper, spoke with PYMNTS about the 10-year journey of bringing mobile payments to Latin America, the additional payment solutions that YellowPepper is now putting into place in the region and how it and developing countries are primed for innovation.
PYMNTS: Why Latin America? What was the unique need there that you saw compared to other regions?
SE: Although it’s evolved since then, 10 years ago, we saw a very high penetration of mobile phones and mobile devices.
We saw a big lack of infrastructure in the financial ecosystem, based on the lack of bankarization; you had about 30, 35 percent of bankarization per country on average.
You had a POS per inhabitant type of ratio that was much lower than in developed countries, such as the U.S. We also saw very low penetration of the Internet, compared to the prevalence of mobile phones.
All those components, plus the smartphone penetration that is happening, presented a huge opportunity to provide a mobile ecosystem built for banking, as well as payments and shopping.
PYMNTS: The region puts YellowPepper in a unique position, but in terms of the operational elements and integration of the service, what differentiates it from other offerings in the space?
SE: First, we came so long ago to Latin America that we had a very big first-market advantage. We work with 50 financial institutions in the region, and we’ve had these clients for 10 years. We grow with these clients; we already reach 6 million customers through our mobile banking products, and they generate about 400 million transactions on a yearly basis, which gives us the platform to start increasing the capabilities and the functionalities that each consumer can have access to, both in their relationship with the bank and with merchants.
Three years ago, we were first to market to deploy, with the processors, the acquiring banks, the issuing banks and the acquirers themselves, a mobile payment platform so that anybody with a smartphone on Android or iOS can actually pay for goods or services at the point of sale, on eCommerce, and withdraw money from an ATM, without the need for a specific mobile phone or specific point-of-sale hardware at the merchant.
We were only able to do that thanks to the deep integration and certification that we’ve done with the processors and the banks to allow us to launch this platform in Q4 of last year, in Colombia and Mexico, so far.
PYMNTS: What are you looking to bring out in terms of innovation, and what do you see generally in the mobile payments space — innovations that you’re excited about or would like to see more of?
SE: I think that we have the ability in emerging economies — such as Latin America — to really plug in some of the technology that exists in the developed world and use the mobile platform to extend the reach of the networks to accept credit and debit cards at more and more merchants, as well as increase the electronic transactions that we see being processed today.
We’re really pushing and working with the merchants to digitize the user experience, to digitize the acceptance of an electronic payment versus cash. There are still a lot of cash purchases being done in those countries.
The first innovation — and I’m not saying it’s an innovation on a global scale, but it’s one for Latin America — is to really migrate people from the physical world of the cash transaction to a digital world and to a digital transaction.
The first attempt was to get people to move from cash to credit and debit cards, but still, most people don’t have them. Now, mobile — which is much more saturated in terms of its reach within the consumer population — gives you the tool to make a much bigger opportunity for digital transactions in those markets.
In terms of more edgy innovation, we’ve started working with the specific technology within the phone, with geofencing and specifically with the security elements that secure the transactions for the end user. They’ll be able, on mobile, for instance, to give their credit card to someone to go shop for them, et al. But what we’ve enabled them to do is make the payment invisible.
My vision of the payment world is that, within five to 10 years, payment shouldn’t be an issue. It should be really invisible, like an Uber. That’s how the experience should be for most of our day-to-day transactions — up to, of course, a certain threshold of amount being spent.
But that’s how it should be; it should be invisible. And we’re working with a lot of different technologies to put that in the digital world so that the payment really becomes an afterthought. And we’re focusing much more on customer loyalty, customer experience, emotional aspect and security of the transaction.