Hyperinflation meets tech: Cash-scarce Venezuela sees boom in payment apps
Hyperinflation meets tech: Cash-scarce Venezuela sees
boom in payment apps
By Andreina Aponte and Corina Pons, Reuters • February
15, 2018
CARACAS (Reuters) - Widerven Villegas and his brother
wash some 30 cars a day at a parking lot in Caracas. Despite charging less than
50 cents, nobody pays them in cash.
In tech hubs from San Francisco to Tokyo, payment is
conveniently made through software on phones and watches on a routine basis.
Amid a dire economic crisis in Venezuela a similar innovation is taking hold,
though for very different reasons.
People from vegetable sellers to taxi drivers have
registered to use mobile payment applications to attract customers who do not
have enough paper money, which is in short supply due to soaring prices. The
maximum daily amount Venezuelans can withdraw from cash machines is around
10,000 bolivars, around 4 cents at the black market exchange rate.
Venezuela's hyperinflation, one of the first of the
digital era, is producing surprise winners in a tough business climate: small
technology companies based in the crisis-stricken country.
"I accept transfers. I have Tpago, Vippo and almost
all the applications out there!" said Villegas, 35, as he clutched a
worn-out tablet and a basic cellphone.
"We don't handle cash because our clients don't have
it," he added. "With the applications I use, I've got their money
before they've even left the parking lot."
Without these apps, even simple transactions like tipping
a waiter or paying for parking become nightmares. Still, banking websites and
mobile apps often crash, as the outdated telecoms infrastructure cannot cope
with surging demand.
'MIRACLES'
Requests for a taxi on the Nekso application, somewhat
similar to Uber, doubled last year, according to its head of strategy Leonardo
Salazar, speaking at the company offices that boast a Playstation console and
ping pong table.
Vippo, a Caracas-based payment app, saw a more than
thirty-fold increase in the number of people registering last year. Citywallet,
born as a pilot project for online parking payments at a private university,
was extended to several shopping centers.
"The cash crisis is getting worse every day but is
giving us the opportunity to capture more and more transactions with our
solution," said Citywallet co-founder Atilana Pinon, 29.
She and two partners set up the app which is now
expanding to Chile, after winning a scholarship from its government.
Creating an app in Venezuela usually requires little
capital, given low salary expectations from coders and near-free electricity
and data costs.
Developers were surprised by the rapid adoption of the
applications and are betting on further growth in 2018.
"There are times when the point of sale machine
stops working," said Maria Lozada, selling cleaning products at a market
stall in the wealthier Caracas district of Chacao. "This is the way to
solve the cash crisis," she says, pointing to a Vippo sign.
Venezuela's central bank inadvertently buttressed the
boom by slowing cash production just as inflation was spiralling into quadruple
digits.
At the end of 2017, the volume of banknotes increased by
only 14 percent, less than half from a year earlier. That coincided with price
rises of more than 2,500 percent, according to National Assembly figures.
Some 18 private Venezuelan banks last year launched an
electronic payment app for consumers. MercadoLibre, one of the largest online
commerce companies in Latin America, also offers a local payment solution.
Even leftist President Nicolas Maduro is getting in on
the act, although critics blame him for the root problem.
"With the digital wallet we are going to perform
miracles at all levels," Maduro said recently, announcing a QR code to be
included on the government's social welfare identification card.
Despite some of the world's lowest internet speeds and a
significant fraction of the population without bank accounts and cellphones,
cash is falling out of favor in Venezuela.
"Perhaps our economy will be cash-less before
Denmark," quipped Miguel Leon, an electronic engineer leading Vippo, in
his open office featuring hammocks.
(Writing by Girish Gupta; Editing by Alexandra Ulmer and
Chizu Nomiyama)
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