How Mobile Money Platforms Bring Economic Growth and Security to Equatorial Markets

Cashless transactions may have taken most of the world by storm, but not everyone is ready for it. Innovative startups like PAGO46 help create opportunity for the millions of people who still operate in a cash economy and help integrate them into the digital world.

G4S’ 2018 World Cash Report found that only 62% of the world’s adult population has a bank account and that 2 billion people operate solely on cash. Let that sink in.

This population is largely concentrated in the tropics and developing areas in Africa and Latin and South America.

In many developed countries, digital transactions have become second nature. But in a cash economy, economic growth on digital platforms is often stunted by banks. If you deal in cash, you aren’t going to make money for banks because you don’t have enough money to offer them.

Over one-third of the world’s population is being excluded from basic electronic payments and banking services.

As the world moves to a digital economy, a massive amount of people can’t participate—and they want to. They want to be able to use their cell phones for transactions, but they can’t in a cash economy without the accounts and cards necessary to break into digital payments. Think of a fruit vendor in Santiago— he makes his money in cash. He can buy groceries and other wares in person, but he can’t buy or sell anything online.

The digital financial agency network business model aims to solve this problem. This model operates on an agency network which offers a distribution channel that turns individual entrepreneurs into financial agents. Freelance agents work with businesses to offer services that can be bought online, but paid for in cash and broker the transaction through a mobile app or online account.

PAGO46, a platform that turns cash payments into digital purchases, uses this model to generate a collaborative network that benefits both agents and consumers. The company currently operates in Chile. PAGO46 refers to the area between the Tropic of Cancer, 23° North of the equator, and the Tropic of Capricorn, 23° South.

According to 24HORAS, more than 75% of Chile’s population operates purely on cash. PAGO46’s mission is to make online transactions 100% inclusive to Chilean citizens without a credit card or bank account. The network of freelance agents helps cash-carrying clients access online services by making online payments for them and accepting payments in cash.

Clients can choose the partner company they want to pay online. They then have the option of paying through a fixed agent, such as a store or kiosk, or a mobile service.

Scale Capital has been supporting PAGO46 since 2016. We value that they fill a fundamental missing piece of the digital economy in emerging markets. If you’re an Uber driver, you can make extra money by signing up to be a PAGO46 agent. When people need to deposit cash, that Santiago fruit vendor can meet with a PAGO46 agent, give him $100, and the agent will certify the payment and deposit it for him.

The platform ends up being a payment alternative—if you want to buy something online or get food delivered, find an agent, give them the payment, and they’re paid a commission. This allows agents to develop an alternative revenue stream through transaction-based commissions and businesses to tap into a market they would not otherwise have access to.

PAGO46 also has a near-infinite capacity for growth and impact due to the “network effect,” i.e., the more agents sign on, the more clients and businesses can benefit from each other. They are also seeing rapid growth within their network. From Movistar and Netflix to Rappi and Easy Payment/Pago Fácil, their recent partners span telecommunications, travel and transportation services, and delivery and e-commerce platforms.

Once they’ve established themselves firmly in Chile; Argentina and Peru are next on their list. Africa, India, and Southeast Asia are also on the horizon.

Startups like PAGO46 have made it their mission to bring one-third of the world into the digital economy. They are also not the only platform to make use of this model. South Africa’s Flexclub’s recent collaboration with Uber Mexico has shown us how networks can connect drivers with investors and cars for ridesharing services.

This streamlined network opens up a wealth of opportunity to cash users. And after only a few years into this technology, there is still so much potential for growth and collaboration on a number of platforms.

Key Takeaways:

  • The future of a “cashless economy” will be incomplete until the needs of the one-third of the world’s population without bank accounts are addressed.
  • Digital financial agent networks can help broker transactions between online companies and cash users.
  • PAGO46 supports online transactions with cash payment options across Chile, with plans to expand across Latin America.