A regular item in the Chilean press during 2014 has been the issue of banks failing to restock ATMs at times of peak demand, and the number of ATMs installed has itself been in decline since peaking in March 2013. This latter point stems from the crime world's current penchant for raiding ATMs by hauling them away or by blowing them up, leading the government to threaten banks with fines if they fail to take adequate preventive measures.

The banks are dragging their heels when it comes to replacing ATMs, either due to delays in finding more secure locations, or perhaps in order to avoid any risk of these fines in the future. And some politicians have even accused the banks of dawdling deliberately so that consumers are forced to make greater use of credit and debit cards, thus incurring greater service fees.

Further contributing to this apparent opening for an alternative to cards and cash is a recent series of impressive, high-profile heists. In August thieves held up an armored cash transport van at Chile's main international airport, making off with six billion pesos (US$10.2 million). Then in late October there were two armored vehicle robberies in the space of 12 hours, totaling three billion pesos. This brought the year's total for armored vehicle robberies to around 10.3 billion pesos, compared to 1.3 billion pesos in all of 2013.

Other Latin American countries perhaps have a longer history of physically protecting ATMs from gangs, but there the criminals still have the option of cloning cards or rigging ATMs so that a cash withdrawal is not delivered to the cardholder.

Either way, the idea of eliminating cash from payment processes is looking better every day.

The case for using the mobile phone as a wallet or bank account substitute has been more than proven in Latin America's less developed nations, such as Haiti, Paraguay and parts of Central America. The Tigo Money service provided by mobile group Millicom goes back as far as 2010, after a false start even earlier, and is still going strong. Millicom ended 2013 with 2.2 million Latin American subscribers using its mobile financial services (MFS), out of a total client base of 19.6 million. That's 11% of its subscribers in the region, up from 6.6% at year-end 2012. Leading the pack was its Paraguayan unit, which ended 2013 with 32% of subscribers using MFS. Platform provider IN Switch said mid-2014 Tigo Paraguay had 1.8 million m-wallet users, who use it to channel US$2.5 million per day, or US$1.4 per person per day.

With Millicom's South American MFS users generating transaction fees equivalent to US$1.90 per subscriber per month (as of 4Q13), the service effectively increases ARPU for these users by 15%, compared to the US$12.20 ARPU being generated in the South America sub-region by all mobile services combined.

Despite this proven case, banks, telcos and independent internet firms continue to explore a multitude of payment innovation possibilities, covering everything from smartphone solutions for affluent consumers who already use formal financial services to SMS or unstructured supplementary service data (USSD) platforms that provide adherents of the informal economy with safer yet affordable alternatives.


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