Mobile Payment in Brazil


15 minutes with Massayuki Fujimoto

The CEO of Paggo tells us how mobile payments are transforming the way Brazilians pay for goods and services
(Article coming from the Review (Digital Brazil: December issue)

Massayuki Fujimoto’s reputation precedes him – and his name is a byword for mobile payments in Brazil. The country was an early adopter of both mobile technology and eFinance, and Fujimoto has been ahead of the curve in both areas. Raised in Rio de Janeiro and based in São Paulo, Fujimoto is CEO of Paggo, an eFinance company developing payment solutions with Oi, the cellphone operator, and the national bank, Banco do Brasil.

Fujimoto began in eFinance in 1996, setting up internet banking for Brazilian bank Unibanco. He worked on the Oi start-up, and then set up Paggo as a mobile payment company from within Oi before leaving to run Paggo as a separate entity. “This mix gave me the experience to run a mobile payments company,” he says.

Paggo is behind two projects that will radically change how Brazilians pay for things.

Payment by phone

The first is for card payments via cellphone. Fujimoto produces a Cielo point-of-sale card payment machine – standard across Brazil – and an iPhone to demonstrate. “Brazil already has an advanced system of payments,” he says. “Wherever you go, you can pay with a credit card.”

But from next year, Oi customers will be able to make payments using their handsets, not a card, at any establishment with a Cielo. The shopkeeper simply selects “cellphone payment,” an SMS is sent to the phone, the customer enters a key number, and the payment goes through. The system, which works with any cellphone, is currently being rolled out to 400,000 Paggo customers in five cities in the northeast of Brazil.

Independent means

Fujimoto’s second initiative will enable the millions of informal sole traders in Brazil to receive card payments via their phones.

In Brazil, there are many street vendors, door-to-door sales people and informal shopkeepers,” Fujimoto says. Forty-seven companies employ three million Brazilians as door-to-door sales people – and these independent vendors turn over R$37 billion (US $21 billion) a year. “They don’t work with credit cards, only cash or checks,” he adds. But they do all have phones: there are more handsets in Brazil than people.

By March 2012, independent vendors will be able to receive card payments using any Oi cellphone. “They’re going to be able to receive payment for their products and services using credit cards,” Fujimoto says. This time, the handset will operate like a mini-Cielo. Payments go directly into the individual trader’s bank or savings account or, if they don’t have one, a husband, wife or relative’s account. A pilot scheme is under way, in plenty of time for the 2014 World Cup and 2016 Olympic Games in Rio de Janeiro. And it could benefit anyone from taxi drivers to tennis coaches.


Pre-paid benefits

Paggo will also have pre-paid payment cards for lower-income consumers by the end of 2011. “It will be a pre-paid card, like a travel card,” says Fujimoto. “You can use it for credit, a cash-in, to go shopping or to transfer from one card to another.” With this “mobile wallet,” he sees benefits not just for companies’ profits, but also for society. “I think the pre-paid card will promote social inclusion,” he says.

In the favelas, which in big cities such as Rio de Janeiro are home to 20% of the population, electricity is generally stolen from nearby power lines with a homemade wiring solution called a “cat.” Water and gas supplies are equally irregular. Utility companies, notes Fujimoto, don’t invest in favela infrastructure because residents can’t commit to monthly bills.

The pre-paid card could change that. “From the moment they’ve got a ‘mobile wallet,’ they will be able to make pre-paid payments,” says Fujimoto. “They will be able to get a week of light, a week of water, a week of gas. With this, companies can bring electricity, light and gas to poor communities.”

One eye on the future

Ask Fujimoto about technology ten years from now and his vision is even more audacious. Everything will be digital. All our information will be stored in a cloud. You’ll be able to reserve a parking space in whichever street you’re heading for and rent whichever computer program you need, wherever you are. Your fridge will tell you which recipes to cook and which ingredients you have. And you won’t be carrying a clunky old smartphone around. “Perhaps you’ll be able to visualize on your glasses, or have sensors on gloves, tiny gloves on your fingers,” says Fujimoto. “It’s going to be hands-free.”