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Mastercard Targets Mexico City, Where Cash Is King - YouTube
Channel: Bloomberg Quicktake: Originals
[4]
The metro, no?
[9]
The metro is…
[16]
The crowds…
[18]
We are talking, only Mexico City, 6 million people
getting into Metrobus and Metro a day
[26]
Most of them are poor people.
[31]
It’s a cash economy, no?
[33]
They don’t have a checking account
or a savings account
[41]
For Rosa and her daughter, Sandi, being part of
Mexico City’s massive cash day-to-day economy
[46]
means joining the millions of people
who commute into the city center
[50]
through Mexico City's Metro,
one of the largest in the world
[54]
And recently, the immense cash-filled Mexico City
has started to look very interesting
[60]
to one financial company in particular.
[63]
It is Mastercard’s global vision
to go after cash
[68]
Cash is actually our biggest competitor,
in Latin America
[71]
Cause it’s like 85% of the transactions
that people make, at least in Latin America
[75]
are cash based.
[78]
Of the estimated 22 million people living
within the Greater Mexico City Area, about
[83]
55% of them live in the informal economy,
and don’t have a bank account.
[88]
Even for those who do, it’s still a city
that runs on cash.
[92]
Lines form at ATMs on payday, so you can withdraw
enough to pay your bills,
[98]
and using credit cards to buy everyday things, like in one
of Mexico City’s busy public markets,
[103]
is only slowly catching on.
[121]
Mastercard is working with the government
to increase the amount of vendors accepting
[125]
credit cards, but they also want to increase the amount of people who have cards in the first place
[130]
What we want is more Mastercard cards in the market
[133]
That’s what we want.
[134]
We are going to bring more cards into the market,
using the transportation as an excuse
[141]
Remember those millions of daily riders?
[143]
They all pay for their Metro rides with one method
[161]
Mexico City’s Metro is one of the
most subsidized in the world.
[164]
It only costs 5 pesos, about 25 cents, but
you can only pay in cash.
[170]
You can either buy a paper ticket, or buy
a refillable card
[175]
But there are no automatic vending machines
[177]
You have to line up, at a staffed ticket booth,
and fill up your metro card, in person,
[183]
in cash
[184]
There are long lines just to reload your transit card
[190]
So Mastercard approached Mexico City for a
partnership, saying look: “How about instead,
[195]
we just get everyone Mastercards that are
recharged automatically from your bank account?”
[199]
It would mean no more lines
[201]
For the metro, this sounds like a great deal
[214]
When it launches, it would just be like Apple Pay
or other tap-and-go services
[219]
Tap into the Metro with your debit card from
Mastercard, and the money comes right out
[222]
of your bank account
[224]
But in order to tap in, you need a bank account
to start with, and alot of regular metro riders,
[230]
like Rosa and her daughter Sandi,
simply don’t have one
[234]
Which is also why this whole Mastercard initiative sounds like a win
[237]
for the Secretary of Economic Development,
[239]
who is trying to bring millions of people out of the informal economy
[243]
and into a place where the government can see them
[246]
We need to make it easier for people to be
included and people to see the benefits and
[253]
not the risks, because for many people, there
risks are becoming part of the formal sector.
[261]
Well, you have to pay taxes.
[270]
The City signed onto the deal in May 2017,
and the first varieties of debit cards
[274]
should arrive in November
[277]
Mastercard hasn’t provided alot of
details about how these cards will be issued,
[281]
but they’re hoping that eventually, like
perhaps by mid 2018, everyone from a fruit vendor
[286]
to government payrolled employee, might have
some version of a metro-enabled debit card,
[292]
and that they would be using them for everyday purchases too
[295]
So what we’re getting in return:
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The more the card is used, at the restaurant,
at the pharmacy, at the supermarket,
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that's our business model
[304]
We make money out of that transaction.
[306]
Mastercard is paying to upgrade Mexico City’s
Metro because they want people to use the
[311]
card outside the Metro
[313]
The transaction fees that Mastercard would collect in bulk would definitely pay off
[318]
They’ve succeeded with this in Colombia,
with Bogotá’s express bus system,
[323]
where Mastercard introduced a similar debit card, targeted towards
[328]
people whose paychecks are directly deposited
into their bank accounts
[331]
This is a perfect product for payrolls
[334]
Money comes in every 15 days.
[336]
So nobody needs to think about reloading
the card, because money will be there
[345]
But this highlights the larger divide in Mexico,
and in Latin America, between economic classes,
[352]
and the Catch 22 of going cashless
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In this digital economy, you need a financial ID.
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The only way to have a financial identity is to
have a bank account
[362]
So that’s the fundamental problem with cash
[365]
To get a bank account though, you need to
have enough cash in the first place
[369]
to even convince a bank of giving you a debit card
[371]
And for Rosa, that’s not so easy to do.
[383]
You have to understand
how big the informal sector is
[388]
The restriction for this type of program is
the income level of the people
[394]
We are a very unequal country.
[396]
The Mexican minimum wage today is $4 a day.
[401]
It is ridiculous by all terms.
[408]
So as MasterCard targets cash in Mexico, the
reality is that, because so many people
[414]
live on so little of it,
[415]
a cashless economy is still a ways away
[434]
Oh sure!
[452]
Maybe 2030, something like that.
[456]
Most modern cities in the world are moving for that.
[460]
And Mexico City is not going to be the exception.
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