Above photo: Serge Elkiner, CEO of Yellow Pepper
Yellow Pepper, the first Latin American mobile financial company to receive a World Bank IFC (International Financial Corporation) equity investment, has launched Yepex, Latin Americas’ first “smart wallet” with functionality heretofore only available in the US through Apple Pay, or Google Wallet. The goal of Yellow Pepper is to, through a mobile device, allow customers to make secure payments in retail locations, and emabling financial institutions, merchants and retailers to enhance the buyer’s experience with support for HCE, BLE, QR Codes, and even cardless ATM withdrawals.
Currently supporting over 30 million transactions per month, Miami based Yellow Pepper has partnered with eGlobal in Mexico and CredibanCo in Colombia to roll out the services. “About seven years ago, we decided to concentrate our focus on the financial industry in Latin America. About two and a half years ago, we decided to extend the functionality of the mobile banking concept and get into payments,” Serge Elkiner, CEO of Yellow Pepper, told Finance Colombia. “People could have several credit cards, and they would want a place where they can consolidate all of their cards, so it had to be bank agnostic. We learned from the merchant side, that they don’t want to integrate 16 different apps for 16 different banks. So what we decided to do was to use the current infrastructure in order to minimize reintegration with retailers and use what they already have with the programs that they are already using so that they don’t have to think too much about adopting and increasing new payment methods.
“Yepex is a new user interface that is much better than using your plastic card. It is much more secure for the end user, and it is much more comfortable for the merchant to use, so that he can bundle the promotion and the payment together without needing the consumer to take a coupon, have a loyalty card, or even their plastic debit or credit card” – Serge Elkiner.
“All of the issues related to mobile phone payment technologies have been very important for us, said Gustavo Leaño, President of CredibanCo, Colombia’s largest Point-of-Sale card processor. “We found Yellow Pepper between 4 or 5 years ago and we decided to form an alliance with them to capitalize on their technological knowledge and their platforms and to make them run on our servers.”
“Let’s say that what the consumer has is a digital wallet. That digital wallet is going to be interfaced with a series of applications, not just the payment application, but many more,” explains Leaño in a call with Finance Colombia. “I’ll talk about at least three of the applications that are ready to be offered in the market. The first one is a digital marketing solution. Because of the relationship that we have with the financial sector and because we are a network that knows and understands all of the transactions that are taking place on the electronic network in our country, we can understand the consumption profiles of the people and design campaigns. A specific campaign, designed for each consumer could be made and the vehicle that we will be using to deliver those campaigns will be the digital wallet. That’s the first application; all of the new digital marketing innovations will be delivered through the digital wallet.”
Leaño continues: “How do we make that delivery? By owning the dataphone network or the POS (Point-Of-Sale) machines in Colombia, we can make the customers’ digital wallet talk. So the consumer experience is going to be totally different and up to date because he will receive promotions that are based on his (or her) lifestyle; completely personalized promotions that will be redeemable at the POS in a totally different manner. That’s the first application.”
“The second application, which is also delivered through the customer’s digital wallet, is an application to control fraud on the customer cards. The customer will be able to establish usage parameters of his card. For example, if I am in Colombia at this moment and I am not making any e-commerce transaction, I could block the international usage of my card and then only enable it whenever I leave the country. This will allow for the customer to have more control over his own product and ensure that he participates in the custody of his own financial product. This is a better practice around the world, making the consumer more aware of the custody of his products,” continued Leaños.
The third application is what we call the payments. It is digitalizing the actual physical cards that exist today and putting them inside the digital wallet, where we will store in a safe way, the clients’ information on the servers of CredibanCo. From then on, the client, in order to make his transaction, will only have to type an ID and the password; the token, per se. What we are doing is simply digitizing the card. This application will be capable of being used in all of Colombia’s payment networks, said Leaños.
Yellow Pepper’s Yepex seeks to:
- Make online payments safer, faster and easier
- Minimize wait times and long lines with pre-order and express checkout functionalities
- Easily integrate with loyalty and rewards programs
- Give users exclusive access to sought-after promotions
“Last year, we started working more in depth with Yellow Pepper because it seemed like a solution with a lot of potential for the Mexican market. What we have achieved up until now, is that with Banamex, one of our main clients, we imagined that this may be a solution that could demonstrate its utility for Mexico. Our final objective is to create a possible standard out of this solution for the Mexican market,” said Javier Villazón, CEO of eGlobal. “Another thing that is also revolutionizing the market is the use of mobile phones to make payments. I would say that there is an important cultural change in Mexico with regards to use of these types of instruments. So there is favorable regulation, there is an emerging culture, and there are also new players who are facilitating different alternatives to consumers and financial institutions. Yellow Pepper is an example of these new players.”
Villazón explained the importance of recent regulatory reforms in Mexico that paved the way for new innovation in banking and consumer credit services. “Last year we had some reforms that opened up possibilities for businesses related to methods of payment. We had financial reform, and among other changes, we started seeing important changes in the way in which the market for POS has developed. Right now, work is being done on the ATM market and will continue. Specifically, speaking about the Point of Sale market, the new reform facilitates the rise of new competitors to develop innovations that may accelerate what has been done until now.”
“In the past, the services offered to businesses that accepted cards were exclusively granted by financial institutions. The newly approved reform allows for new players to enter the payment systems arena and these players do not necessarily need to be financial institutions. This has lead to the formation of new companies with highly innovative ideas.”—eGlobal’s Javier Villazón
“What the reform also does is that it promotes favorable conditions for all the participants in the country’s payment ecosystem. This has allowed everyone to offer solutions and everyone to participate in the market, says Villazón. “I would add that from a cultural point of view, its noticeable how debit card usage has increased in Mexico. There is an entire growing experience in Mexico of people using what I would refer to as loyalty cards, cards with which people accumulate points or miles with purchases. We are also seeing a boom of cards from the biggest retail stores in the country. Nowadays, those cards offered by the big retail store chains are being widely used and have very attractive marketing offers. So there is a wide variety of card options for consumers now. I can now have credit cards issued by my bank, debit cards or store cards. So there is a new culture of using these kinds of products.”
“From a legislative point of view, from a cultural point of view, and from a technological point of view, there are positive changes in this market. If you ask me for results, I can say that during the last two years, there has been a growth of a little over ten percent on the amount of transactions, at least for transactions that take place internally in Mexico. The growth rate has been steady for the last five years,” concluded Villazón.