June 25 2010
The National Banking and Securities Commission has introduced a new concept – the mobile banking agent management company, also referred to simply as a 'manager'. It has amended the General Provisions for Credit Institutions, which defines the term as the holder of a telecommunications public network concession or permit granted by the Department of Communications and Transport under the Federal Telecommunications Law.
Banks may provide a number of services through a network of banking agents under the control of a manager. The most important functions are opening, placement, assignment and distribution in relation to mobile bank accounts for the agent's customers, either as a low-risk mobile bank account or a low-transaction mobile bank account, based on real-time information provided by the agents. Bank of Mexico Ruling 1/2006 of January 27 2006 defines a 'mobile bank account' as an account which is registered as such by a bank and which is linked to a mobile phone line. The three types of mobile bank account are:
The other services that may be offered are:
Banks wishing to offer such services must obtain Banking Commission approval. Their application should include a business plan which sets out:
In addition, each bank must:
Managers and agents may not:
The introduction of this new system has been welcomed as a good beginning for the regulation of branchless banking in Mexico. However, the system in itself is not enough, as it uses a bank-based model and only a minority of Mexicans have access to banking services. A bank-based model means that a manager always acts in the name and on behalf of the bank, which remains liable for the services provided by the manager.
During the first quarter of 2010, mobile phone traffic in Mexico increased by 17.7% compared with the same period in 2009. Mexico has 85.3 million active mobile phone accounts, which represents an increase of over 11% on 2009. However, compared with other countries in South America and Europe, Mexico has a relatively limited banking industry. In 2009 there were 10.4 bank branches, 31.6 automatic teller machines (ATMs) and 415 point of sale (POS) terminals for every 100,000 Mexican residents.(1)
Thus, the government has a good opportunity to regulate a new branchless banking model to allow people who do not have access to banking services, but have a mobile phone, to obtain bank services - which would be a significant step forward for the Mexican economy.
At present, only banks are allowed to obtain funds from the general public. The Banking Law provides that securing funds from the general public will occur when: (i) funds are solicited, or an offer is made to obtain funds, from unidentified individuals or companies or an offering is made through the mass media; or (ii) funds are obtained or solicited regularly or as business practice. An overhaul of Mexico's banking regulations will be needed to implement a non-bank-based model; however, the benefits of a complete overhaul will outweigh the risks involved.
For further information on this topic please contact Miguel Angel Peralta or Christian Dorantes Picazo at Basham Ringe y Correa SC by telephone (+52 55 5261 0474), fax (+52 55 5261 0557) or email (firstname.lastname@example.org or email@example.com).
(1) In contrast, Chile had 11.4 bank branches, 37.3 ATMs and 783 POS terminals, while Brazil had 9.7 bank branches, 78.6 ATMs and 716 POS terminals. This compares with 50.8 bank branches, 83.1 ATMs and 688 POS terminals in Germany and 101.4 bank branches, 135 ATMs and 3,012 POS terminals in Spain. (Statistics provided by the National Commission for the Protection of Financial Services Users.)
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Miguel Angel Peralta
Christian Dorantes Picazo