The highlands of the Sierra Madre in Chiapas are known for producing some of the best coffee in the country — which means, farmers here say with pride, some of the best in the world. The life of a coffee farmer in southern Mexico has not changed much over the decades: the seeds are planted in the rich volcanic soil, green coffee plants flower and turn red as they ripen, and all are painstakingly picked by hand.
The hilly terrain of these small plots — a typical farm is only a hectare or two — means mechanization is not often possible. And given that the coffee “cherries” ripen at different rates, even rudimentary mechanization may not be desirable. But there is one powerful tool that can help these smallholder farmers, who are increasingly squeezed by middlemen eating up their profits, become more financially secure as they sustain the coffee supply chain’s future: digital payments.
Through the Café Paga-NKG BLOOM collaboration between NKG’s local subsidiary, Exportadora de Café California in Mexico, Mastercard, banking partners Banco Azteca and Citibanamex, and Fundación Capital, farmers are issued a debit card and receive training so they can collect payments electronically, manage their money and save it — reducing earnings lost to intermediaries and increasing transparency between the farmers and their buyers while keeping their money secure. The initiative has since expanded to Colombia.
“The situation now in Mexico is very complex, and there are some places where you cannot keep your money at home because it could be very dangerous,” says Luis, another Chiapas farmer who opened his first bank account through the initiative. “It is good for me because now I don’t have to keep my money at home, and I have the opportunity to save money in a safe way.”
But that’s only one part of the transformation of this cash-based ecosystem. Mastercard is working with payment facilitator Qiubo to help the small businesses that supply the farming community with household basics like soap or toothpaste accept electronic payments. Through its workshops supported by the Mastercard Center for Inclusive Growth, Fundación Capital can combat myths about digital payments and build confidence in formal financial institutions that have not adequately served their needs in the past.
“It was difficult to break the paradigm around the belief that it’s not safe to keep their money in the bank,” says Guillermo, a field officer with Exportadora de Café California, the NKG subsidiary in Mexico. “It was a cultural shock for them, but gradually they have been accepting and using the banking accounts.”
Lessons in Expanding Digital Payments to Remote Communities in Mexico and Colombia
Digital financial services are especially relevant during the COVID-19 pandemic — governments can deliver financial support to those deeply affected by the crisis quickly and easily, with recipients able to access funds while avoiding crowds and risks of contagion. Franz Gomez and Alejandra Montes Saénz with Fundacion Capital share lessons from the Café Paga project that illustrate why digital payments can help the most vulnerable communities become more resilient in this time of crisis and beyond.