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New alliances and fights in the mobile payments war

2020-06-22T03:34:22.967Z


Partners and rivals. Banks associate and target Mercado Libre. Visa and Mastercard close deals with fintech and Facebook is fully in business.


Damien Kantor

06/21/2020 - 1:00

  • Clarín.com
  • Economy

The business of digital wallets and mobile payments is boiling. The electronic money war produced new alliances and rivalries. Traditional banking advances in the creation of a multifunctional mobile payments platform to compete against Mercado Pago. Driven by Santander, BBVA and Galicia, the consortium added 7 new partners, there are other interested parties but several are still suspicious .

The fight between Mastercard and Visa is also growing , as they compete to conquer new allies in the fintech universe, an industry that is gaining penetration in the unbanked population. And last but not least, Facebook has just launched its wallet on WhatsApp in Brazil and plans to expand it worldwide . The coronavirus sped up the retraining process and the battle is just beginning.

The idea of a bank consortium to unify all payment methods and accounts in a single mobile application - a digital wallet - took shape in late May, with the creation of Play Digital, the company that will promote and manage its development. According to reports, in addition to Santander, BBVA and Galicia (the three largest private banks), Macro, Supervielle, Hipotecario, Mariva, BST (Banco de Servicios y Transacciones) and Banco de Neuquén have already joined . They assure that they are also very close to agreeing on others, such as HSBC and Itaú . Nation, Province and City for now are not part of the game. "The possibility is not closed, but there are many things to resolve," they point out, without giving more details.

Public banking is key to the project . Altogether, the 3 main entities have more than 14 million clients and doubt about the decisions that the Digital Play directory may take. Above all, to complicate their own technological developments, some of them very successful, such as the "DNI Account" . This is the name of the free wallet that the Province launched during the quarantine and that " today exceeds one million users " since it became a way "to collect Federal Emergency Income (IFE) for 700,000 beneficiaries," they say in the entity. .

Banks can join Play Digital as shareholders or adherents , depending on the capital contributed. The trophy is great, since the new digital wallet will coexist with those of each bank and will enhance its use against the advance of Mercado Pago and other fintech companies, such as Ualá, which have been gaining market share. "The key is massiveness," its promoters agree, to illustrate the importance of associating all possible banks.

The Play Digital application will allow linking the number of a cell phone (as if it were a document) with bank accounts, credit and debit cards . Thus, the client can buy with a QR code, transfer money between people, recharge prepaid services (cell phones, SUBE, among others) and pay taxes from the phone. " The goal is for the cell phone to replace cash . You can transfer money to family or friends, pay a plumber, go to the supermarket or buy clothes, anything, without using cards or cash, "explained a source linked to the project.

Negotiations to add other banks continue. The deadline , initially set for June 16, was moved to July 7, precisely because of the discussions. Likewise, they plan to launch the application in the second half of the year, when the technological compatibility tests conclude. This happens because the Play app (it will go to the market with another name) does not invalidate the use of each bank's applications, such as Galicia Move, Buhobank, del Hipotecario, or Naranja X, Tarjeta Naranja's wallet.

That same strategy has already been implemented by traditional banks in other countries to confront a common enemy: Paypal. It adopted the names of Zelle (USA), Swish (Sweden), Mobile Pay (Denmark) and Bizu (Spain). "We took it as a challenge and we are waiting to finally understand what form it takes, " said Alejandro Melhem, Country Manager of Mercado Pago, referring to the move by Play Digital. In the first quarter of the year, financial businesses reported to Mercado Libre US $ 273 million at the regional level, against the US $ 380 million that was invoiced through its eCommerce platform .

In Argentina, Mercado Pago is a leader . It has more than 700,000 businesses adhered to its QR collection system and "34,400 small businesses and professionals have joined since the quarantine began." Across the counter, the application totals 3.4 million users and its use increased 45% in May compared to April, and they issued more than 2.1 million prepaid credit cards. The Central Bank closely follows its evolution and that of the fintech world. The monetary authority has already established two key regulations, the objective of which is to limit the use of customer deposits by financial technology companies. "We share that there is a regulation for the industry , they are going in the right direction," said Melhem.

Visa (Prisma group) and Mastercard have their own dispute. "In the last 5 years, Mastercard has partnered with the largest fintech companies in the region, including Nubank (Brazil), Albo (Mexico) and Ualá (Argentina)," they list. Founded by Pierpaolo Barbieri, Ualá has already issued more than 2 million prepaid cards , this is much more than half of the total plastics shipped by the fintech world (3.5 million, according to data from the sectoral chamber).

Moni is another of the startups associated with Mastercard. Juan Pablo Bruzzo, its CEO and founder, maintains that the business has just started and ensures that none of the initiatives of private banking or the arrival of technological colossi surprises him. "Digital money is an immature market and what is required is to enlarge the cake," said the businessman to the Economic . Moni has 70 employees and its main business is very short-term microcredits.

Currently, Visa leads in quantity of plastics granted and also in use. In the startup world, Brubank is the main partner, the fully digital bank that he founded and is run by former Citibank Juan Brochou. It also complements the offer of Wilobank, the other digital bank belonging to Eduardo Eurnekian's business group. "We are about to celebrate 2 years and we have already exceeded 100,000 clients," said its CEO, Juan Azoidi.

Facebook went into business and that can change the whole picture. She launched her digital wallet for Whatsapp in Brazil and plans to expand it to the whole world. Before the end of the year, according to the plans of the social network, they plan to reach India, Mexico, Indonesia and Spain. Argentina is on the agenda, but it will depend on the economic evolution of the country and the corresponding authorization from the Central Bank.

New and old players

The data went unnoticed by the majority. This Friday, the American Stripe , one of the large digital payment media companies, which rivals mainly Paypal , officially landed in  Argentina . According to the Official Gazette, the company was registered with the General Inspectorate of Justice, a key procedure to start operating in the country.

The digital wallet business was accelerated mainly by the coronavirus pandemic . Data from the Fintech Chamber indicate that to date more than 7 million CVUs have been issued (Unique Virtual Key for cell phones), the equivalent of the banks' CBU. On the other hand, more than 2 million merchants accepted digital payments through POS connected to mobile phones. 

Every day the options multiply. In addition to banks and fintech, there are companies that created their own wallets to facilitate their operations or for security. The most striking cases are those of the CAME chamber of retail trade (which launched CAME Payments) and Coca-Cola Andina , one of the 4 bottlers operating in the country.

Naranja (which has Galicia among its shareholders) launched 15 months ago Naranja X , a wallet ecosystem and Pos for businesses that currently has 220,000 clients and 70,000 businesses and professionals attached to its ecosystem. Its CEO, Gastón Irigoyen, says he is not surprised by the possible arrival of Facebook in the country. "It is to analyze, the launch of the wallet through WhatsApp is relevant data, but I think it is natural, " he said.

Also remember that it is not the first time that technology giants have entered the financial world. "There were already Google Pay, Apple Pay and Samsung Pay. Even Apple has just launched its own physical credit card in conjunction with Mastercard, "said the executive. Anyway, it considers that the payments by Whatsapp are of another magnitude for their massiveness.

Source: clarin

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