More than half of the Mexican population doesn’t have a bank account. Due to the length of time it takes to set one up, as well as taxes that consumers have to pay monthly, approximately 75 million Mexicans remain unbanked.
But a startup called Sr.Pago wants to change that with its mobile point-of-sale system that includes a Square-like card reader, mobile apps for managing payments they receive, and a prepaid debit card that gives them instant access to funds that they’re paid.
Sr.Pago, which basically translates to “Mr. Pay,” hopes to serve the huge number of Mexican residents who don’t have a bank account by enabling them to accept debit and credit card transactions in lieu of cash. Today, those consumers are mostly limited to making and receiving payments in cash due to the difficulty in setting up a bank account.
According to Sr.Pago CEO Pablo Gonzalez Vargas, it can take nearly a month for a consumer to get a bank account. Not only that, but once they have one, they have to declare and pay taxes on their transactions every month.
That’s a huge disincentive to consumers, which is why many businesses have begun paying their employees with pre-paid debit cards. But now that there are more than 116 million debit and credit cards in the country, there aren’t a lot of options for small merchants, laborers, and others to accept payments from those who wish to pay with them.
Sr.Pago lowers the barrier to entry by providing them with an easy-to-set-up mobile app that connects with a specially designed card reader. That reader was specifically created to work with chip-and-PIN cards, which are increasingly becoming standard in many parts of the world. It also provides them with a debit card of their own to be able to access and pay with their own funds.
Unlike banks, Sr.Pago requires only that a user take a picture of their government-issued ID, along with a bill to verify their address. With that info, users can register in about five minutes and be up and running with its mobile point-of-sale system within a day.
Once they use the card reader to charge someone else’s card, the funds are instantly available in their account and can be used immediately. They can be accessed via debit card or users can take funds out at the local Walmart.
The company charges $50 U.S. for its debit card and card reader, which is sold in big box retailers in Mexico. But it primarily makes money as a payment processor, charging 3.59 percent for each swipe made on the reader, and a $1 fee for transferring money to the card.
While it’s launching in Mexico, the Sr.Pago team sees a huge opportunity to expand to other nations in Latin America that have a large number of unbanked residents — places like Colombia, Chile, Costa Rica or Nicaragua.
Sr.Pago was founded by Vargas and CTO Antonio Flores Aldama, and now has a staff of about 25 based in Mexico City. The company has raised $1 million in seed funding, with notable investors that include Revision3 and Digg co-founder Jay Adelson and Defense.Net and Prolexic co-founder Barrett Lyon, along with a number of Mexican angels.