Today MicroCapital.org, a microfinance publication, announced the introduction of pre-paid, reloadable Mastercards in Peru. The “LATODO Mastercard” is a project launched by NovoPayment, a US-based prepaid card provider that will run the business through Servitebca Peru.
NovoPayment also works in Florida, Mexico, Colombia and launched a similar prepaid credit card program in Venezuela in 2005, MicroCapital reports. NovoPayment is backed by US credit card companies (both Visa and Mastercard) and has partnered with micro finance institutions in order to provide this service. Currently, it has over 1 million prepaid credit cards in operation, generating an annual transaction volume of USD 750 million.
New Payments Ecosystem in Peru
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This prepaid credit card is unique because one does not need a bank account to qualify or buy one, and the credit card can be reloaded in grocery stores and pharmacies. In a May 31 press release, NovoPayment bills the first “general purpose reloadable program” (GPR) as the first of its kind for the “unbanked” in Peru, in line with its mission to develop a “new payments ecosystem.”
What this means is that Peruvians without bank accounts will now be able to enter “modern” markets and make “modern” transactions (i.e., online, auto-payments, direct deposit, etc.) with credit cards even if they don’t have a bank account established (which probably requires a fixed address and other information). In other words, this would seem to be a type of sub-prime lending so to speak – but the LATODO card will provide users with the chance to build a credit history so that they can qualify for other credit products later on.
Financialization of Latin America
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Latin America has come a long way recently and I’ve written about some of their financial developments. Latin America has proposed an alternate currency for trade, ETFs focusing on Latin America are popping up everywhere, Brazilian afforestation projects are increasingly attracting foreign investors, and many Latin American countries have the fastest projected GDP growth rates for 2012.
Modernization and infrastructural development happen unequally all over the globe. As we know all too well, there are many parts of former so-called “Third World” countries that are 100x more modernized than much of the U.S. (airports, roads, network infrastructure).
Yet at the same time, every new structural development that appears to put power or mobility in the hands of its customers is always at the same time there solely because it can make a good profit. This doesn’t necessarily make it a negative thing, but it is important to understand how technological development works.
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