Spain's Telefonica SA (TEF) and MasterCard (MA) on Wednesday launched a mobile money service in Argentina with an eye on millions of wireless users who don't have a bank account.

Telefonica and Mastercard plan to eventually offer the service, dubbed Wanda, in a dozen Latin American countries through a 50-50 joint venture.

Wanda is based on a virtual prepaid debit account linked to a cell phone. Argentine users can transfer money between Wanda accounts, buy air time, make purchases at participating stores, and soon will be able to pay bills, Wanda general manager Ramiro Gomez said.

"We're mainly focusing on people outside the banking system," which is as many as 50% in Argentina, Gomez said at a press conference Wednesday.

Many Argentines shun banks due to the country's long history of banking crisis. For people living in the rural hinterland, bank branches are few and far between.

"We're offering a solution to someone who doesn't have a bank card," Gomez said.

While banking use is relatively low, Argentina boasts one of the highest mobile-phone ownership rates in the world.

In 2010, Argentina had about 142 mobile phones for every 100 residents, according to the International Telecommunications Union. By comparison, Brazil had 104 per 100 residents, Japan 95 and the U.S. 90.

Telefonica's local wireless subsidiary is one of the large mobile-phone operators in Argentina with about 17 million active mobile accounts.

Telefonica and MasterCard hope to match the success of mobile money services in African countries such as Sudan, Algeria, Kenya and Gabon.

As many as 93% of Kenyans use mobile phones and 73% use mobile money services, according to a World Bank report published in March.

Wanda users will pay a fee for making fund transfers, although store purchases don't carry a fee. Basic accounts will be limited to holding 6,500 pesos ($1,461). The company hopes to link the service to bank accounts and credit cards in the future, but for now will only provide a prepaid service.

The system also has the potential to challenge international money transfer providers such as Western Union (WU) that are used to send remittances between countries in Latin America. But for now, Byzantine money transfer regulations in the region, especially in Argentina, make this impractical.

"We're taking it step by step," Gomez said.

The service is limited to cellphone customers of Telefonica's Movistar in Argentina. Rivals such as Telecom Argentina SA (TEO, TECO2.BA) and Claro, a unit of Mexico's America Movil SAB (AMOV, AMX, AMX.MX), haven't moved into the business so far.

-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com