The future of payments will not have cash or cards. Simply bring a cell phone or other device to a charging terminal. The cashless era will be based on passing values in bits and without "tangible" exchange. Almost as if it were magic.Just as 2019 was the year in which contactless technology (which allows paying by supporting a card) expanded to reach 60% of the collection of payment devices, Argentina has just entered the next phase of payment methods.
The first step in that direction was given by Galicia and Mastercard together with the manufacturer of smart watches Garmin, whose equipment can be directly supported on a device to pay for an operation just by stretching the arm, making the experience almost frictionless.
Rephrasing the phrase of a prestigious Argentine magician, "it can't be done faster." In addition, this method is even faster than the QR code itself, in which you have to open the app, scan the code, choose the card and accept the transaction. And that lives its moment of glory with 2.3 million monthly users and 1.2 million monthly transactions registered every month Mercado Pago.Thus, the practicality of contactless transactions strongly drives a growing trend worldwide: according to eMarketer, more than 1 billion individuals will pay with this method in 2020. That is, one in seven.
In this context, Argentines can pay with their smart watches and try a bite of what already appears: operations that will be carried out with the cell phone, bracelets, rings and any other element that integrates the device that does everything "the trick": the NFC chip
Although foreign users of Google Pay, Apple Pay or Samsung Pay can already pay with their cell phones and smart watches in albiceleste territory, customers of Banco Galicia and Mastercard will be the first Argentines who can do it locally.
As iProUP anticipated, the next step of the "Contactless Revolution" realized the tokenization of the cards. That is, the encryption of plastic information so that it can be used digitally and minimizing the chances of fraud."This development is our MVP (Minimum Viable Product), we are already tokenizing the entire Mastercard card container, having the possibility of being used in wallets, wearables such as Fitbit, Apple or Samsung," Alejandro Falco, Media Coordinator reveals to iProUP of Digital Payment in Galicia Bank.
The executive anticipates that this not only points to those who have Mastercard without contact, but also to other technologies. "Anyone who has a card with a band or chip can also take advantage of Contactless Week discounts," he says.
According to Falco, tokenization will also allow plastic to be used in digital environments, such as Netflix, Spotify or Uber. "The token is associated with a user, device and a merchant, which allows you to use that card only in those conditions, avoiding fraud," he explains.
Thus, Galicia will take this functionality to its mobile banking app so that people pay for a good or service directly by approaching the cell phone. They also plan to bring this technology to Visa, although they started with their competitor for an issue of available capacity. "FirstData came first to tokenize Mastercard that Prisma a Visa," he reveals.
With the tokenization of credit cards, experts say that the range is opened for new digital payment methods that will increase financial inclusion.
"The next revolution will be biometrics, both in facial recognition and fingerprint. I have all the devices related to me and I will authenticate myself to a terminal that will ask me with what means I want to pay," the expert anticipates.
However, paying with "whatever" will depend largely on consumer habits and the efforts of companies to make the method as convenient as possible.
"Surely, the youngest will be encouraged to try them first. But more than the product offer, it will depend mainly on the design. It will be used initially for small purchases, like a runner who uses a Garmin watch and stops to buy a bottle of water, "explains Carballo.
Larravide ensures that these new means of payment are aimed at people in large cities, aged 25 to 45 and with a medium and high socioeconomic status. Therefore, it recommends that companies communicate more and that governments encourage these products."When an electronic medium is launched over cash there is a promo behind. Companies must invest in communication to inform about available media and teach how to use them, since virtual wallets exist since 2016, but there are still people who do not know "indicates.
The era "without cash" has already begun. And according to Larravide, there are a number of factors that make Argentina a favorable country for the massification of electronic money:
- The great need to reduce operating costs and move cash
- For fear of bank robberies and shops
- Comfort, to avoid routinely going to the ATM
"The most important thing about the cashless era is that people have alternatives. People want to be included, but they also want options to choose from," says Carballo.
As the two main card players reveal to iProUP, so far the following amount of plastics has been issued:- Mastercard: 2.2 million- Visa: 10 million
Thus, this new technology represents about 15% of total payment credentials: according to the Central Bank, the park consists of 90 million cards (not all active), divided into 42 million credit and 48 million debit.Juan Fantoni, Director of Business Development at Mastercard, assures iProUP that there are already more than 360,000 stores that have payment systems compatible with contactless, so this technology has been showing an even higher level of expansion than QR payments, since Mercado Pago recruited about 260,000 stores in the country.
The manager says that in addition to Galicia and Garmin, "we are already in talks and moving forward with proposals, both with fintechs and with traditional banks, for the empowerment of digital wallets and the use of wearables - watches or bracelets - as means of payment."
For her part, Gabriela Renaudo, Group Country Manager for Argentina and the Southern Cone of Visa, points out that for years they have implemented payment apps with large players "worldwide along with issuers such as Apple, Google, Samsung, among others." And they also did it in the region, so Argentina will be the next country on the roadmap.
"In Chile we launched two digital wallets and in Paraguay, since the beginning of the year, 10 banks have their own ones provided by Visa. Something similar happened with the introduction of Bigo in Uruguay. In Argentina, this technology will also be available in the short term, "says Renaudo.
The executive notes that the brand has already experimented with smart clothes, such as rings and even gloves, so you don't have to take out your cell phone or credit cards. "Almost any connected device can become a place to shop, shop and pay. This is the new era of connected commerce," he says.
In order for the cell phone to become a means of payment, it must have an NFC chip, a technology that allows communication between nearby devices and that is integrated into the current medium and high range phones.Just as it will become a "replacement" for plastics, merchants can also use them to accept payments for contactless plastics (or other phones) without the use of additional equipment.
"Mastercard has the Tap on Phone technology available for the region. In other countries it is already operational. In Argentina, only those who wish to implement it can be used," says Fantoni.
Banks may offer greater benefits in their mobile bankings, such as the possibility of paying in commerce or that their clients make transfers to each other by "colliding" cell phones. In addition to Mercado Pago, bigtech may offer their wallets: Google Pay, Apple Pay and Alipay, among others.
In this way, Argentina is preparing to start a new stage in digitalization of money. Cash will continue to lead, but nothing can stop the mobile payments revolution.