Colombia using instant payments to drive financial inclusion amid the pandemic

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Transfiya, a blockchain-based funds transfer system, is transforming payments in Colombia for the benefit of underbanked and financially excluded consumers. Mobile wallet providers, a Facebook Messenger payments chatbot, WhatsApp and a cash pay-in/pay-out network are joining established banks in Transfiya to extend the reach of interoperable real-time P2P payments.

A key accelerator for usage of Transfiya has been the disbursement of government emergency coronavirus relief payouts to mobile wallets and bank accounts. An additional benefit is that welfare recipients who acquire new mobile wallets, are holding their benefit funds in their accounts and actively using their wallets.

ACH Colombia, the country’s bank-owned ACH operator, partnered with Bogota-based fintech Minka to launch Transfiya at the end of 2019. The service addresses the lack of real-time payments infrastructure and open banking connectivity in Colombia, which has a low level of bancarization.

Ninety percent of payments in Columbia are cash-based, a percentage that has hardly changed in the last 50 years. Prior to Transfiya, Colombians wanting to send money to customers of other banks had to use ACH transfers, which took several business days to arrive. Also, if they wanted to send money to another customer of their bank, they had to pay a fee.

“The difference between a market like the U.K. and Colombia is that the U.K. has an existing payments infrastructure and protocols that the banks have agreed on and use,” said Domagoj Rozic, Minka’s CEO. “The big challenge in Colombia was to agree on what protocol to use for building a new real-time payments infrastructure. Once an agreement had been reached by Colombia’s entire financial ecosystem, Minka developed a protocol based on the blockchain and open banking, which is simple and fast to integrate.”

Minka’s protocol acts as the common messaging standard for exchanging information about Transfiya payments between senders and recipients, and includes open banking APIs that integrate financial institutions to the real-time scheme. Transaction messages are sent instantly over a secure private layer, which Minka operates on top of the blockchain.

ACH Colombia started working with Minka three years ago to develop the specifications for Transfiya. The service operates 24/7, providing free transfers of up to COP 250,000 ($65) per day to recipients' mobile phone numbers.

So far, seven Colombian banks have signed up for Transfiya, including Davivienda, Itaú, Banco Caja Social, and Nequi (a digital-only bank owned by Bancolombia which has 3 million customers). Movii, an electronic money institution (SEDPE/Sociedad Especializada en Depósitos y Pagos Electrónicos) catering for unbanked and underbanked Colombians, and DaviPlata, a mobile wallet owned by Davivienda, also support Transfiya.

“DaviPlata wallets can be opened by people without bank accounts, just with their ID document,” said Margarita Henao, Davivienda’s vice president of personal banking and DaviPlata. “Between April and July 2020, Davivienda and DaviPlata customers made or received over 40,000 Transfiya transactions.”

When Colombia was hit by COVID-19 in March, Bancolombia, Davivienda and Movii were the three financial institutions chosen by the government to distribute emergency benefit payments to Colombians.

Movii, which has 1 million customers, provides mobile wallets linked to prepaid Mastercards, with customers’ mobile phone numbers serving as their account numbers. According to Movii CEO Hernando Rubio, 10% of Movii’s active customers are using Transfiya, accounting for 70% of all current Transfiya transactions.

Hernando Rubio, CEO of Movii
Hernando Rubio, CEO of Movii

Rubio said that, because Movii uses Transfiya to relay COVID-19 benefits from the Colombian governments to recipients, it has seen significant growth in new accounts and active users.

“We were the only financial institution to use Transfiya for distributing welfare payments,” he said. “As soon as customers opened their Movii account, they could pull down their welfare payments from the government using Transfiya. Prior to the crisis, we were opening 1,000 accounts a day, and now we’re opening 8,000 accounts a day.”

Because Movii offers features such as bill payments, money transfers, and mobile phone top-ups, this encourages new customers to keep their funds in their wallet and continue using it.

Typically, when underbanked Colombians receive welfare payments into an electronic account, they withdraw the funds immediately, for example at an ATM.

However, according to Rubio, 65% of Movii customers who have a Movii card and wallet are using their welfare payments for purchases with their card or for other transactions such as bill payments. “Also, almost 40% of customers with a Movii card and wallet have decided to load extra cash to their wallet after opening a Movii account for receiving government benefits,” he said.

Transfiya is the latest instant P2P transfer system using mobile phone numbers to be launched in Latin America following Peru’s Plin, which was launched in May 2020 by Miami-based fintech YellowPepper and three large Peruvian banks.

Depending on the participating financial institution, customers can use either their bank’s mobile app or its website to send money via Transfiya. Nequi customers use the digital bank’s Eva Facebook chatbot to send money via Transfiya in Messenger.

“Our aim is to enlist all Colombia’s 40 financial institutions to support Transfiya, including wallet providers,” said Gustavo Vega, ACH Colombia’s president.

As of early August, Transfiya had processed 458,000 transactions worth COP 47 billion. In July, Transfiya processed 90,000 transactions, down from 116,000 transactions in June, which was the payment scheme’s best month, Vega said.

Currently, Transfiya can only be used for P2P transfers and payments to small merchants and people selling items online, but ACH Colombia plans to add other features such as business payments and QR code transactions.

Vega said COVID-19 had slowed rollout of Transfiya, as it limited the number of banks which were able to sign up for the service. “We had wanted to involve more banks for Transfiya’s launch,” he said. “But the banks have been working on other products to support their customers during the pandemic. So, it’s taking longer to get more financial institutions on board with Transfiya.”


Minka’s vision is to offer its protocol to banks and ACH operators across Latin America so they can build their own real-time payments networks, according to Rozic.

“We’re already working with banks in the Dominican Republic and Bolivia on real-time payments,” he said. “We also want to partner with real-time payments technology providers such as Vocalink and YellowPepper to improve the payment systems that are already in place in Latin America.”

Achieving interoperability with other instant payment systems such as Visa Direct is very important for Minka, Rozic said. “We’re open to integrating with different payment rails,” he said.

Additionally, Minka and ACH Colombia are conducting pilots with WhatsApp to enable users of the messaging app to send money to each other via Transfiya.

In 2019, Minka participated in fintech accelerators run by Visa and Mastercard, and is currently partnering with Mastercard in Latin America. In October 2019, Minka received $2.5 million in seed capital in a funding round led by U.S.-based Fintech Collective, with Mastercard and cash pay-in/pay-out network operator Carvajal Tecnología y Servicios also participating. German development fund DEG provided $500,000 in May 2020 to Minka to promote financial inclusion in Latin America.

“Payments digitalization is a great need for people in Colombia and Latin America,” said Alexandra Reyes, Carvajal’s CEO. “We believe that the key element is interoperability, connecting different players to facilitate faster payments. Minka offers a platform that enables and promotes interoperability. Its blockchain-based ledger-as-a service approach enables easier integrations using APIs and cryptographic signatures.”

Reyes said that Carvajal is working on a project to enable its cash deposit/pay-out network to process transactions on Minka’s platform. “Once we’re fully integrated, this will allow Minka to grow its transaction pool and start searching for additional markets in Latin America,” she said.

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Financial inclusion ACH Colombia P-to-P payments Government payments Cash Digital payments