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Contxto – As you may have heard (or read), Latin America is filled with emerging and well-known fintechs.
What’s perhaps less apparent is the region’s lack of infrastructure for making real-time payments. That’s where Colombia-based Minka comes in.
Leveraging its partnership with ACH Colombia, this startup is developing a blockchain-based cloud platform. With its deployment set for February, it may mark a major milestone in disrupting finance within the region.
Latin America struggles with physical infrastructure deficiencies and—digital ones as well. Although for now, we’ll focus on its lack of real-time payment infrastructure. But what does the concept even mean?
Real-time payments are transactions that are completed almost instantaneously between two parties. There are usually no barriers for the time or date in which these transactions can be carried out. And in places with the infrastructure for this is available, it’s at a low cost.
Nonetheless, with the current financial infrastructure in Colombia and various other Latam countries, making real-time payments can be slow, not to mention costly, because of chargeback fees and other operational expenses.
Users can expect delays in transactions being reflected in their bank accounts by business days. Moreover, often the service isn’t available 24/7 nor every day of the year.
And that’s because banks and fintechs aren’t connected over a common network.
In the United States for example, real-time payments are hosted by The Clearing House (TCH). Through its platform, banks, financial players and customers are all connected to achieve faster payments.
Something that’s greatly needed in Latin America, and more so with all these emerging fintechs.
Related article: IBM and Chamber of Fintech partner to transform banking in Argentina
Minka and Colombia’s case
Given this reality, Minka aspires to develop the infrastructure to accelerate real-time payments, their availability, and at a more accessible price.
Albeit, like in other countries, for these infrastructure networks to function, other banking and financial institutions must be involved. That’s why ACH Colombia, a chamber with the purpose of improving financial services within the country, had to be involved in the project.
Through the blockchain cloud platform, Minka hopes to increase connectivity and facilitate real-time payments.
Likewise, to support its solution, Minka raised an investment last October with Carvajal Tecnología y Servicios for an undisclosed amount for its blockchain solution. It also raised around US$2.5 million from Mastercard and Fintech Collective.
After transforming the infrastructure of Colombia, Minka’s CEO Domagoj Rozic, plans to take the startup’s solution to other parts of Latin America. Although he acknowledges that one of the biggest challenges Minka will face is convincing companies and institutions on the importance that this blockchain cloud could provide for payment transactions.
If this project proves successful, it could take financial services across Colombia, and the region to new heights. So I’ll definitely be keeping tabs on this one.
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