C3 Card: Enabling Access to Credit Through Trust Relations
The c3 card is a microfinance instrument based on relationships of trust, offering accessible and cheap credit to low income people.
About Your Organization
: Association of Cooperative Educators of Brazil – ONG Educoop
Brazil, MG, Viçosa
Country where this project is creating social impact
Brazil, MG, Viçosa
Is your organization a
Non‐profit/NGO/citizen sector organization
How long has your organization been operating?
Has the organization received awards or honors? Please tell us about them
A Ong Educoop até o presente momento não recebeu prêmio público.
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Select the stage that best applies to your solution
Growth (your pilot is up and running, and starting to expand)
How long have you been in operation?
Operating for 1‐5 years
Which of the following best describes the barrier(s) your innovation addresses? Choose up to two
The Need: What problem are you trying to solve?
Numerous initiatives aim to develop sustainable mechanisms in communities. The strategies adopted by the organizations that promote these initiatives is to act systematically changing the consumption patterns of the population.
In this scenario, the Educoop NGO implements and manages a local credit card called C3 Card that leverages the social technology of credit (“fiado”), a practice that allows access to goods, services and products based on relationships of trust between residents of a community.
According to the Data Popular Institute (2010), the practice of “fiado” or spun credit, is present in 27% of families in class C, & up to 45% in class D. Other social technologies such as credit card loans, selling meal-aid, crowd funding for collective purchases and participating in sweepst
The Solution: What is your solution? Be specific!
Aiming to overcome the demand for credit by these families excluded from the banking sector or weakened by the high costs of their products or services, the C3 Card innovative initiative was launched. With a local self-managed and formal structure, this initiative aims to supply the need of access to goods, services and products by families with no access to the traditional banking system.
The C3 Card aims to seize the opportunities in relation to the “good customer”, the regular client, in which a bond of trust between customer and micro entrepreneur is established, based on an ancient concept, “fiado” or installment credit.
As such, a new means of payment is introduced in this relationship, allowing greater integration and dynamism in commercial transactions based on trust, that is, installment credit, that generally speaking is still a form of credit concession, based only upon one´s word, honor and trust.
The Model: Walk us through a specific example of how your solution makes a difference; include your primary activities
A few days ago we received a call from a shopkeeper asking for information on the history of a client user of the C3 Card in order to carry out a sale.
The data in the transactions of this client demonstrate that in 7 months he had 4 invoiced issued, totalizing R$411, 18. All these invoices were paid, however, there was an average delay of 8 days. Because of this delay, that is, the risk in the transaction, the merchant received R$4, 11 in default interest and penalties.
The charges for late payment (risk) that used to go to a bank or financing agent remained in the community, promoting local development. It is worth noting that this value is significantly less than the interest rates practiced by conventional credit cards.
The first phase in promoting the C3 Card is the membership of a commercial establishment, forming an accredited network.
The establishments get their best customers to join this network, formalizing pre-approved credit to customers who can buy in the accredited network.
On the day of maturity of the invoice, the client can make a payment between the minimum value and the total value. If the total amount of the invoice is not paid, bank interest rates, today around 430% per year in Brazil, are not applied as with conventional credit cards.
Hence, the submission of this proposal aims to raise funds for investment in the C3 Card initiative in the city of Viçosa, Minas Gerais (MG), consolidating it to become a case replicable in other communities.
The Marketplace: Who are your peers and competitors? Identify others also working to address the needs you are and what differentiates you from them. What challenges could these players pose to your success or growth?
Currently, there are a diverse range of organizations and initiatives that aim to meet the demand for credit of these communities, such as community banks, Civil Society Organizations of Public Interest (OSCIPs), credit cooperatives, NGOs and other initiatives at the regional and national level. However, these initiatives concentrate their efforts on the offer of credit to micro entrepreneurs, in other words, to productive microcredit. As such, these organizations demand an instrument such as the C3 Card to offer credit for consumption, enabled by the C3 Card.
The C3 Card is currently utilized only in the municipality of Viçosa, however, through the information technology & social technology it leverages, it is structured to be expanded to other cities and countries through partner organ
This Entry is about (Issues)
Founding Story: We want to hear about your "Aha!" moment. Share the story of where and when the founder(s) saw this solution's potential to change the world.
In the year 2009, the Educoop NGO began to analyze the trust relationships that existed in the Santo Antonio neighborhood in Viçosa, MG, diagnosing: i) numerous residents of the neighborhood with access to credit through the “fiado” inside and outside the neighborhood; ii) numerous residents who were not homeowners and who demanded moving street, neighborhood and city, establishing new bonds of trust through “fiado”; iii) commercial establishments in the neighborhood that sold “fiado”. As such, it was verified that the social technology of the “fiado” dynamize the local neighborhood economy, as a portrait of the city of Viçosa, MG and of all Brazil, however that it lacks a structured action to reduce the asymmetry of information between the economic agents: micro entrepreneurs and clients, and thus boost this local initiative. The “fiado” practice also lacks a network articulation, allowing trust relationships to be expanded and consolidated.
Please describe the goal of your initiative; outline what you are trying to achieve
With the C3 Card initiative, the Educoop NGO strengthens existing trust relations and thus supplies more accessible credit to people and more sales in local commerce. The goal is also to improve the living conditions of users, reallocating the normal costs of a traditional credit operation into benefits for society.
Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)
The lack of affordable financial products tailored to the needs of underserved and excluded communities,.
If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?
The C3 Card instrument is initially accessible to the population of Viçosa, MG, however in another moment will be expanded to people in other cities and communities, where residents have difficulties making purchases locally due to: i) hostilities created by the loan collection process; ii) difficulty in gaining the trust of micro entrepreneurs for purchase on credit; iii) exclusion from traditional banking sector and its services, such as credit cards.
Could your solution work in other geographies or regions? If so, where?
The C3 Card instrument will work in other communities in Brazil as well as abroad. Where there are trust relationships in commercial transactions between clients and merchants, the C3 Card may be utilized.
This way, after the consolidation of the C3 Card in Viçosa, MG, the C3 Card will be expanded to other cities. The C3 Card initiative, as a self-managed too through Manager Groups, requires local partner organizations for its promotion.
In addition to partner organizations, the Manager Groups of the C3 Card is a local body for the definition of credit policies, credit analysis and loan collection that are fed into the management software and executed by the partner organization within the online C3 Card system.
If your solution is dramatically successful, how will things be different in 10 years?
With actions that foster the C3 Card, the learning curve over the course of 10 years, will enable numerous impacts, in addition to its expansion to other cities, states and countries.
The first impact to be highlighted is the gain in scale, in other words, a lower cost per transaction passed onto customers and micro entrepreneurs, making the initiative more accessible and less dependent on resources from supporters.
As an online tool, there is also the opportunity of provision of other financial services, with the possibility of transactions between customers themselves, such as the offer of insurance, consortia and other banking services.
It is also hoped that mechanisms to minimize the risk of default are developed, mainly by reducing the information asymmetries through new management reports for merchants and the management team of the C3 Card.
What will have had to have changed to make this happen?
The main change required by the Educoop NGO regarding the C3 Card was the decentralization of its operation to its partner organizations, in other words, the NGO was developing a technology that required less of its partner organizations in relation to the previous stages of invoice generation, receipt and transfer of payments on to the merchants. These actions would be managed by Educoop, which demanded a technological wingspan, technical staff and other resources that it lacked and which would make expansion impossible.
As such, the business model was reformulated to include decentralized management activities where partner organizations would take on the above mentioned responsibilities as well as other previously defined responsibilities, such as promoting the Manager Groups, implementing the policies defined by the Managing Group, accreditation of customers and merchants, payment collection from defaulting customers and marketing activities aimed at consolidating the C3 Card.
What has been the impact of your solution to date?
To date, the C3 Card accredited 25 commercial establishments in the city of Viçosa, MG and made 124 customers members of the initiative with an average limit of R$470, totalizing in available resources an amount of R$67.894, 40. The total limit available, only R$41.991, 50 were used by customers.
As demonstrated above, the C3 Card initiative enabled market access to 124 customers within a diversified network of commercial establishments and service providers. For the accredited network, the C3 Card facilitated the expansion of their sales to new customers, expanding trust relationships.
Even though it is an incipient initiative and lacks in available resources, the financial data of the C3 Card has made significant amounts of resources available in the city of Viçosa, MG.
What is your projected impact over the next five years?
The expected impact for the next 5 years is the expansion of the C3 Card to partner organizations in other states in Brazil.
Through a notice published in the year 2011, Educoop selected projects of reapplication of the C3 Card through the following organizations: Agricultural and Livestock Cooperative of the Santana Ipanema Region, Obra Kolping from the state of Piauí; Capital Social (Social Capital); Forum for Integrated sustainable Development of Jacunda and Arca Potiguar for promoting the C3 Card in 32 cities.
What barriers might hinder the success of your project? How do you plan to overcome them?
It is worth noting that the main barrier preventing the success of the C3 Card is the information asymmetry about the tool for sensitization and mobilization of new memberships of partner organizations. This requires marketing strategies, especially online marketing through the Educoop NGO institutional website and through the C3 Card website – www.CartaoC3.com.br.
Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact
The success will be based on the actions of the local partner organizations.
Identify three major tasks you will have to complete to reach your six-month milestone
Update the management software of the C3 Card
Look for financial supporters for the expansion of the C3 Card.
Develop marketing actions aiming for the consolidation of the C3 Card.
Now think bigger! Identify your 12-month impact milestone
The C3 Card implanted and consolidated in the city of Viçosa, MG.
Identify three major tasks you will have to complete to reach your 12-month milestone
Achieve impacts in the economic and financial lives of the beneficiaries.
Establish a solid relationship and durable partnerships with the beneficiaries, whether individuals or corporations.
Gain scale with more affordable transaction costs.
Tell us about your partnerships
For the C3 Card initiative, the Educoop NGO has the support of the Federal University of Viçosa (UFV) through the development of scientific research and university extension activities.
In addition, the Educoop NGO has raised funds with supporters aiming to supply the demand of resources for the operation of the C3 Card.
Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?
The Educoop NGO plans on expanding the C3 Card initiative to other regions, especially after the improvement of the online tool that manages the transactions-with gains in automation as well as in the learning curve of the technical staff
The expansion comes from the C3 Card´s potential to be replicated in other communities, keeping in mind it is an online tool
The expansion will happen through partner organizations who will have the role of coordinating the promotion activities such as setting up &counseling the Manager Groups, thereby succeeding that the C3 Card benefits other communities
What type of operating environment and internal organizational factors make your innovation successful?
The success of the C3 Card initiative is permeated by internal factors related to information technology and the associative base of the innovative tool of the C3 Card. Thus, by joint decision of the users of the C3 Card, the main policies related to the C3 Card are defined & implemented in its development within the community.
After the establishment of these policies, the data is inserted in the online platform that feeds the main routines of the online system, thus enabling the effective management of the C3 Card and the coordination of the activities of the technical team.
In addition to these factors, it is worth noting the decentralization of the operation in the expansion of the initiative, which allows the transfer of the operational process stages to the partner organizations
Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list
The main demand of the C3 Card is financial for investments, making this local initiative into a case, replicable by other organizations.
The resources the NGO Educoop can offer to support other initiatives comes from its specialization in research and information, besides the network of contacts it has developed through its actions.