Montevideo, Uruguay (ViaNews) – Uruguay, a small country located in South America with a population of 3.4 million, is born a pioneer by nature, but the pathways to innovation are also followed closely by controversy, its faithful companion.
It´s not often one hears about the country in the international media news, and when one does, it is mostly soccer-related or due to its famous tourist destinations with sandy beaches.
“Innovation, being avant-garde, is always polemic”, Ferran Adria.
In 2017, the country made international headlines when the law to legalize marijuana gained full effect. Last July, Uruguay became the first country in the world to legalize marijuana, from production (carefully monitored) to sale for recreational use. The process demands users to register in a government database, which includes fingerprint recognition. The sale of the cannabis is only available in less than 30 pharmacies and is limited to 40 grams monthly for any Uruguayan citizen over 18 years old.
“Innovation is moving at a scarily fast pace”, Bill Gates.
Pilot Program: e-Peso
Last Friday, Uruguay began to sail into uncharted waters, focusing on a completely different journey.
The Central Bank of Uruguay (BCU) has launched a pilot program, (e-Peso) becoming the first country in the world to issue digital notes of its local currency, the Uruguayan peso.
“This project puts Uruguay at the forefront in an International level”, stated Mario Bergara, president of the Central Bank of Uruguay.
The idea is to turn the smartphone into a digital wallet by downloading an app and using it to pay bills, to get paid, or wire money in an easy and secure way. If you´re wondering what´s new about this process, the answer is not much indeed, but this is just the tip of the iceberg.
How does it work?
The pilot program is set to expire after six months of use.
Once the user downloads the app “e-Peso”, he or she will be able to charge it with digital notes issuance by the Uruguayan Central Back itself. Having 100 e-PESO in the digital wallet is the same as to carry a $100 bill, (one hundred Uruguayan peso) in paper money.
As Mr. Bergara has explained to local media, “the pilot plan is not about a new currency or payment system, it´s a digital representation of the local currency”.
The e-Peso is only available to a limited of 10.000 Antel (state-owned telecommunication Company) smartphone users.
Each of those mobile users (final customers) can charge their digital wallet with a limited amount of $30.000 (thirty thousand Uruguayan pesos) about US$ 1000 (one thousand American dollars). The way to do so is through a local payments firm called RedPagos.
In case of commercial users, (businesses) the limit is raised to $200.000 (two hundred thousand Uruguayan pesos) which represents an estimated US$ 6000 (six thousand American dollars).
A total of $20 million (twenty million Uruguayan pesos) is expected to be issued by the Central Bank of Uruguay in digital notes during the six month period.
Once the user downloads the app, they must register by entering their personal information and then create a PIN code to access it.
During the testing period, fifteen businesses will be operating within the system, from a veterinary store to a gas station.
Once the pilot plan finalizes, the Central Bank of Uruguay will take its time to carefully evaluate the program results on how citizens have succeeded to get their day-to-day financial transactions done. If it’s proven effective, the country could then move towards a gradual implementation process as a reliable alternative to physical money. That being the case, the platform would be made available to all local mobile users, and businesses.
The app has been developed by an international firm, presenting a very simple, and easy-to-use platform for users.
Money is already becoming digital on a global scale and there are many reasons why advanced economies are encouraging cashless payments. Paper money is extremely expensive to print while fees with digital money are minimum, benefiting governments, customers, and businesses, not to mention the costs physical money incurs with maintenance and storage.
The Central Bank of Uruguay is giving a step forward into digital payments, and a cash-free near future.
And it´s completely free of charge to all its citizens.