A river uprooted, gain of fishermen? At this time, the saying goes loudly in the corridors of Mastercard, which bets to take advantage of the situation to give the big blow in the Argentine market.
The American giant has the free ground to become the number one of the "plastics" in the country. It happens that, until now, Prisma controlled 58% of the transactions with credit cards, while the rest of the market was controlled by First Data, a firm that in Argentina takes control of Mastercard's operations.
But Prisma, whose main shareholders are the banks Provincia, Santander, ICBC, Galicia, BBVA Francés, Macro and HSBC, has just announced a key change: 51% of its share capital was removed.
This is part of a disinvestment order issued by the National Commission for the Defense of Competition (CNDC), after an investigation that resulted in the firm taking advantage of its dominant position.
In this context, the American fund Advent disbursed US $ 725 million to keep the shareholding of Prisma, which, after the operation, would be worth about US $ 1,420 million. The banks will have up to three years to transfer 49% of the remaining shares.
The transaction fueled fierce competition between Prisma and First Data linked to anticipating who will win in the preferences of the digital user, after years of rivalry in the "physical" world between their Lapos and Posnet payment devices.
The Mastercard case
The "operational leadership" of Mastercard is already underway and includes several edges. The main objective, not only in the domestic market but also at the regional level, is to stop being a "simple" card to become one of the leaders of the revolution that the "digital economy" brings.
This, of course, has its impact in Argentina, where it is a strategic partner of the digital banks Ualá and Wilobank, and of Mercado Pago (through the card issued with Banco Patagonia). It also supports the growth of startups such as Aivo, dedicated to artificial intelligence solutions for the financial, consumer and retail markets.
It also leads the expansion in Argentina of transactions through contactless solutions, now limited to plastics, but soon available for smartphones.
"Supporting the digitalization of payments is a way to advance the adoption of financial tools for inclusion, and new generations are rapidly incorporating these new tools," said Carlo Enrico, president of the company for Latin America, to iProUP.
"That Uber has included the payment in cash in the Latin American countries in which it operates is a sign that the digital option must be advanced fast, and the fintech is the low cost way for new consumers to have the opportunity. to be included, "he added.
For Martin Lang, president of MasterCard Argentina, the aforementioned contactless payments are not simply a paradigm shift for a constantly evolving market, but also the key to take first place on a podium that, for years, had Visa as an element indissociable.
"In the world, 90% of contactless operations are still with a card, and only 10% through the telephone, there is no doubt that this will evolve and it will turn around." The truth is that this solution facilitates the shopping experience, "Lang explained to iProUP.
Until 2017, the use of non-contact payments in the country was null, according to the data provided by the company itself. According to the executive, this is already changing and accelerating.
"This year we started with the issuance of contactless cards and we will end up with 500,000 plastics based on this technology, and we already have agreements with practically all banks," he told iProUP.
The other leg of the plan is provided by First Data itself, which presented its ambitious Clover payment platform at the end of November in Buenos Aires, a digital solution aimed at small and medium businesses that will compete face to face with Prisma's business tools.
This POS is the result of a million dollar investment of the brand in the country; even, its global CEO, Frank Bisignano, was present at his local launch, held just hours after his meeting with Mauricio Macri.
The product will reach stores at the beginning of 2019, the year in which the acquiring business that regulates credit cards will be open to all players. Thereafter, the obligation for all POS to accept all cards (Visa, MasterCard, American Express) will apply.
Why can Clover play a key role in this segment? The unit accepts virtually all types of payments, from magnetic strips, EMV chips, standard credit and debit cards and, of course, contactless payments. All of them, immediately.
According to Bisignano, Argentina is the first country in Latin America where First Data launches this new product and the fifth in the world, after the United States, Canada, Germany and the United Kingdom.
Patricia Guarnes, responsible for operations in the country, confirmed in her presentation that will point to the segment of those who do not have their own system, estimated by the company in about 200 thousand shops. The goal is in itself ambitious: reach 50 thousand establishments in the first year.
Conversion of Prisma
As mentioned, the issuance of Visa debit and credit cards is in the hands of Prisma, a company that has the main banks in the country as shareholders. Despite this, he could not repeat his hegemony in the digital payment market.
The company was a pioneer in the use of devices that connect to the cell phone so that businesses accept cards without resorting to a POS terminal. In late 2016 launched mPOS, a small device that plugs into the headphone port of a smartphone to charge with plastics.
In 2017, Mercado Libre introduced MercadoPoint, a similar device based on its Mercado Pago digital wallet. Because of its capillarity, he managed to make his solution the most adopted one.
Later, Prisma launched its Todo Pago virtual wallet, although it hit the e-commerce giant. Despite the integration with home banking, the app failed to impose itself on Mercado Pago, which leads the transaction segment with QR.
"There are already more than 1 million users who make payments with the digital wallet Since we launched it, more than 1.2 million QR transactions have been completed," said Ignacio Estiváriz, Mobile Director of Mercado Pago, to iProUP .
On the other hand, Santiago Benvenuto, manager of New Businesses of Prism Means of Payment, indicated to iProUP that "QR operations are growing rapidly, doubling their use every month since the last three months",
Faced with this disadvantage, Prisma came out to compete aggressively: offers a discount of 40% on the YPF service stations that accept the QRs of Todo Pago and 12 installments without interest in some locations, both physical and online, for those who pay with their digital wallet .
On the other hand, the company has a long way to go in the field of credit cards. Mastercard "got up" to Visa with the contactless plastics, that is, those that have an NFC chip and work with just supporting the reader, in the style of the SUBE, regardless of the magnetic card.
It is also staying out of the "fintech revolution" that is transiting Argentina. In effect, the new digital banks issue cards in cobranding with Mastercard.
This could change next year, as Prisma has just announced that it obtained the license to issue Mastercard cards in the country.
Meanwhile, 51% of its shareholding will go to Advent, a fund based in Boston, USA, which in Argentina participated with investments in Fada Pharma and LKM laboratories, Graffigna winery, Universal health coverage Assistance and private mail OCA.
Will this corporate change cause Prisma to go backwards in the career of virtual collections? Or, to put it another way, will it be the opportunity for First Data to take the lead in a few boxes in the race for virtual collections?
It remains to be discovered if their virtual wallets and their collection methods will be able to overshadow Mercado Libre. The Fintech revolution has just begun in Argentina, but it predicts 2019 with fierce competition.
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