YellowPepper Aims for Financial Inclusion

Published by Partnersinprepaid

A privately-owned company, YellowPepper began life in 2004 providing value-added services for US cellphone users. This quickly evolved to the point where, in 2007, it decided to focus exclusively on supplying mobile financial services to both unbanked and banked consumers across Latin American and the Caribbean.

Currently, YellowPepper offers its mobile banking and payments platform in nine different countries—Bolivia, Colombia, the Dominican Republic, Ecuador, Guatemala, Haiti, Mexico, Panama and Peru. Its partners use the platform to offer services such as bank account balance enquiries, person-to-person transfers, cross-border remittances, bill payments and mobile airtime top-up.

Although YellowPepper’s operational headquarters are in Miami, its holding company is incorporated in Panama. “Of our 203 employees, 65 work in the software quality control team,” says YellowPepper co-founder and CEO Serge Elkiner.

Currently, the bulk of YellowPepper’s 4.8 million total users conduct mobile banking transactions. “We process 20 million transactions a month, of which 90% are banking transactions,” says Elkiner. “Currently, 65% of all those transactions are balance enquiries, with the rest being transactions such as remittances, account transfers, payments and mobile airtime top-up. However, in 2012 the transaction mix will shift from mobile banking to mobile payments.”

The majority of YellowPepper’s mobile banking users access its platform via SMS, but the company does offer smartphone access. “We see around 600,000 smartphone transactions per month,” says Elkiner.

Strategic development

“YellowPepper is proof of the adage that ‘if you don’t succeed at first, try, try again’,” says David Lott, senior vice president at US-based consultancy Speer & Associates. “After launching in the US, like many other mobile start-ups, YellowPepper struggled. Realizing the US would be a slow adopter of mobile payments due to the plethora of channels available for consumers to access their accounts, YellowPepper set its sights on Latin America.”

YellowPepper’s flagship project is Haiti’s TchoTcho Mobile service, for which it provides prepaid mobile wallet technology and an agent network. For more info, see: “Mobile Payments in Haiti”

TchoTcho Mobile, which is operated by mobile telco Digicel, and is backed by Canada’s Scotiabank acting as a banking partner, had 500,000 users as of March 2012. The service enables unbanked Haitians to carry out cash withdrawals, deposits, purchases and P2P transfers via cellphone.

In January 2011, TchoTcho Mobile received $2.5 million in funding from the Haiti Mobile Money Initiative (HMMI), a fund established by USAID (U.S. Agency for International Development) and the Bill and Melinda Gates Foundation to encourage Haitian telcos to launch mobile money services.


“Latin America offers significant potential for mobile financial services due to the high penetration of cellphones with low-cost service plans, and a high percentage of unbanked consumers needing a channel for cash access and making payments,” Lott says.

According to the International Finance Corporation (IFC), a subsidiary of the World Bank, Latin America and the Caribbean has a 78% cellphone penetration rate. However, only 35% of the region’s 580 million population has access to financial services, the IFC says.

US-based consultancy Pyramid Research predicts that the number of Latin Americans using mobile devices to access financial services will rise from 18 million in 2011 to 140 million by 2015. In a webinar provided by Pyramid Research and Latin American telecoms portal Telesemana, Pyramid Research senior analyst Jose Magana said Latin America has achieved the right conditions to increase the uptake of mobile banking and payments services. “In some Latin American countries, nearly 16% of the population is using the mobile Internet,” Magana said. “A very large percentage of the population is under 30 years, which is the demographic that is likely to try new services.”


In 2010, the IFC made a $3 million equity investment in YellowPepper to help the company roll out its network. In addition, the IFC was instrumental in YellowPepper receiving a USD2 million investment from the family office of an unnamed private Latin American investor.

In May 2011, YellowPepper received a $500,000 grant from Haiti Integrated Finance for Value Chains and Enterprise (HIFIVE), a USAID-funded project, to support the development of mobile money services in Haiti—in addition to the USD2.5 million that TchoTcho Mobile received from the HMMI.

In December 2010, the Inter-American Development Bank (IADB) presented an award to YellowPepper and its Ecuadorean partner Banco Pichincha for their mobile banking and payments service in Ecuador. The ConnectBanking award was given for the service’s use of new information and communications technologies, the IADB says.

Open architecture

YellowPepper operates an open-architecture, technology-neutral clearing-house that connects multiple service providers including banks, mobile carriers, fast-moving consumer goods companies (such as the brewer SAB Miller), merchants, and consumers.

According to an IFC report on YellowPepper, the reason for YellowPepper’s inclusive business model is its vision of bringing financial services to unbanked consumers via the mobile phone. “We want to bring financial services to the masses,” says Elkiner.

“YellowPepper has succeeded in getting strong financial institution penetration in most of the countries it operates in,” says Lott. “From a platform basis, its open network is unique and has the advantage of allowing entry and participation by a wide variety of players relatively easily and quickly.”

“YellowPepper has a total of 46 bank partners, including Canada’s Scotiabank,” says Elkiner. “We work with Scotiabank in a number of countries. In Colombia, we have 12 bank partners, and in Ecuador, our largest market in revenue terms, we work with most of the banks and credit unions.”

Agent network

In 2011, YellowPepper launched a mobile wallet targeted at unbanked consumers. This product has been rolled out to users in Haiti and Peru, but is already old news. YellowPepper is currently far more interested in rolling out its Yepex-branded agent network, which consists of a switch, agents, and a network of merchants that accept YellowPepper payments, than in marketing its mobile wallets.

“Currently, we are not focusing on issuing mobile wallets,” says Elkiner. “Our focus is on building up our Yepex agent network for distributing mobile banking and payment services. Banks and mobile telcos can use our agent network to provide mobile wallets to their clients. They can either use our mobile wallet technology or their own wallets.”

Building the agent network involves YellowPepper staff going door-to-door to visit merchants, says Elkiner. “We handle recruiting and training of agents, as well as ensuring they comply with domestic financial regulations,” he says. “Agents display our Yepex branding.”

YellowPepper launched an agent networks in the Dominican Republic in March 2012 and in Mexico and Peru in April 2012. “In Haiti, we started to build our agent network in April 2011 and now have 938 active agents in Haiti,” says Elkiner. “We launched our agent network in Ecuador in 2010 and have 1,200 agents there. We will be rolling out an agent network in Colombia during 2012.”

YellowPepper’s agents act as human ATMs, says Elkiner. “The agents don’t just provide cash withdrawal and deposit services for unbanked consumers’ mobile wallets,” he says. “They also allow banked consumers to make deposits or withdrawals from their bank account. It’s cheaper for banks to use agents than to build branches.”

Other services

“We offer mobile airtime top-up both to our mobile wallet users and to users of our mobile banking service,” says Elkiner. “But airtime top-up is not a significant revenue stream for YellowPepper yet.”

YellowPepper has developed a mobile B2B payments service which can be used for payments collection by distributors who are delivering their goods to small retailers. Instead of keeping large amounts of cash on the premises, the retailer pays for purchases using SMS messaging. The advantage for the suppliers is that their delivery drivers, by accepting mobile payments, avoid carrying cash and running the risk of being robbed.

“B2B payments don’t provide a significant volume yet, but we are betting on them growing in size,” says Elkiner. “Right now, we are piloting B2B payments in Peru and Colombia. The next countries where we will be piloting B2B payments are the Dominican Republic and Mexico. As we conducted a B2B pilot in Ecuador a year ago, we will be going straight to commercial rollout in that country.”

Elkiner says three firms are involved in YellowPepper’s Colombian pilot. “In Peru, we’re working with SAB Miller and will be adding two other companies soon,” he says.

In March 2011, YellowPepper completed the certification process to become a mobile money transfer service vendor for Western Union. This means that YellowPepper users will be able to send and receive cross-border remittances via Western Union on mobile devices.

“We will be going live with Western Union in 2012,” says Elkiner. “Our agreement with Western Union is for cross-border remittances using our agent network or via any organization that uses the YellowPepper platform.”

YellowPepper—key facts

Founded: 2004 by Serge Elkiner and Rafael Russ

Employees: 203

Investors: IFC invested USD3m in 2010; an unnamed Latin American investor invested $2m

Operates in: Bolivia, Colombia, the Dominican Republic, Ecuador, Guatemala, Haiti, Mexico, Panama and Peru.

Partners include: Western Union, Coca Cola, SAB Miller, Scotiabank, Banco Pichincha (Ecuador), MiBanco (Peru), Banco Crédito del Perú, Grupo Aval/ Banco de Bogotá (Colombia) and Credibanco Visa (Colombia); Digicel Haiti with which it has issued 500,000 mobile wallets; mobile telcos Orange (Dominican Republic), Comcel (Colombia), Entel (Bolivia), Cable & Wireless Panama, Claro (DR, Ecuador, Guatemala, Panama, Peru), Movistar (Colombia, Ecuador, Guatemala, Panama, Peru), Tigo (Bolivia, Colombia, Guatemala), Nuevatel (Bolivia), Alegro (Ecuador).

Users: 4.8 million monthly active users (March 2012) performing 20 million transactions per month.

Services: consumer mobile remittances, transfers, purchases, airtime top-up, bill payments; bank account or credit card balance enquiries; B2B payments.