Episode 125 - COVID-19 Relief: Collaboration, Regulation, and Tech Do Good - Roberto Marinho, CEO, César Souto, Conta Zap, Brazil

This illuminating Payments on Fire® episode takes a deep look at a very new Brazilian payments platform called Conta Zap (Zap Account in English) and how a group of community minded people came together with Conta Zap to provide basic income to economically displaced Brazilians during the COVID-19 outbreak.

The story illustrates how the combination of entrepreneurial thinking, technology, and right-thinking regulation can make a real impact on even those living at the edge.

The Situation

This story is about how that wallet was put into the field to serve a particular community in real need. That community is made up of mostly fishermen, like the one pictured below, living in the Vergel do Lago neighborhood in the northeastern city of Maceio. Most residents are fisherman who sell their catch to restaurants, a transaction shut down due to COVID-19 restaurant closures.

Already living on the edge, that shutdown put enormous pressure on the 20,000 fishermen working in the area.

How It Started

Conta Zap is a digital wallet that simplifies moving money for P2P, bill payment, and other consumer-based transactions. Under Brazilian bank regulations, Conta Zap is also a "payment institution" able to handle payment transactions on behalf of its user but not to be a lender itself.

When word of the fishermen's plight reached Conta Zap leadership the idea of using its wallet to get emergency funds to the fishermen was born. The Zap do Bem (roughly translated as Zap for Good) service came to be, based on the Conta Zap wallet. A group of corporate funders donated the funds for the fisherman with each fisherman receiving the equivalent of $35 USD, a meaningful figure to these impoverished workers.

The idea of Zap do Bem started in mid-March before it was clear that the federal government was going to provide an emergency stipend to poor Brazilians. To get those stipends to the millions of unbanked Brazilians, the government took advantage of recent Brazilian Central Bank regulations that allow for easy opening of low value accounts. These so-called CAIXA Tem digital accounts are offered by the government owned CAIXA Econômica banks. Remarkably, more than 40 million accounts are expected to be opened by individuals who previously did not have an account.

As with Conta Zap, this has allowed Brazil to disburse funds relatively easily and safely to millions of people. Of course, this hasn't stopped people from lining up to take money out as cash but it is a very big, important first step in creating a digital ecosystem.

Multiple Layers of Tech, Regulatory Foresight, and Good Will

The story is a digital one. The Zap do Bem was not about helping speed cash distribution. Stakeholders combined technology from multiple parties, the generosity of donors, and these important regulatory guardrails to create a valuable service. Here are the ingredients to Zap do Bem's layer cake:

1. The Fishermen. The fishermen needed digital accounts and the means to spend their money.
2. The Merchants. Conta Zap enrolled merchants to accept payments from the Conta Zap wallet.
3. The Donors. A collection of corporate and individual donors agreed to provide the funds to help the fishermen get through the pandemic.
4. Conta Zap provided the digital wallet, enrolling the invited fishermen participants via text message. A Brazilian celebrity sent a message to recipients assuring them that the offer was legitimate.
5. Oi, one of the country's leading telcos, enabled Conta Zap to verify customer identity using Oi's geolocation capability for address verification and to help validate the fishermen's income level by looking at purchase records for prepaid airtime. Oi also helped identify merchants in the neighborhood. That allowed Conta Zap to get those merchants enrolled so the fishermen could begin to spend the donated funds.
6. WhatsApp, by virtue of exposing its capabilities programmatically, Conta Zap, was made available to beneficiaries entirely on WhatsApp using an AI interface as seen in the screen shot below. This approach allows Zap to provide its digital wallet service at very low cost.
7. Regulators. The enabling regulation allows accounts with low balances and modest activity to be opened with minimal personal identification requirements, i.e. your name, national ID number, and birthday.

Screenshot and translation of Zap do Bem:

Hello! I'm the virtual assistant for Conta Zap and my name is Zapelino.

Here you can pay your bills, top up services and much more.

Type the option the you want to do now:

1 – Open my Conta Zap

2 – Create a Login

3 – How to open my account

4 – How Zap works

5 – Zap card

We'll plan to follow up on these developments in the future. Listen in now as Elizabeth McQuerry interviews Roberto Marinho, CEO of Conta Zap, and César Souto, a Member of the Board of Directors. If you would like to become a donor, click here and scroll to the bottom of the page for instructions.