The quarantine, which ended up extending until April 13, changed the lives of Argentines and affected those who send or receive remittances (money), generally, at the beginning of each month.
More than 50% of the population is unbanked, so sending family aid, in this context, has become a real problem. However, this extraordinary situation, at the same time, allowed the advancement of digital platforms that make it possible to carry out transfers without leaving the house.
One of the companies most affected by this situation is, without a doubt, Western Union. Right now, it is operating with only 25% of its stores open, sources from the US giant acknowledged to iProUP.
Although it offers the possibility of transferring to bank accounts (it even has an app), the main service is based on people going to a place to send or receive cash. And this is precisely the big problem you face.
Nowadays, this service can only be accessed through the branches of Correo Argentino and in different shops, such as supermarkets, pharmacies and service stations, among others. Against this background, as expected, Western Union operations have decreased significantly.
"As long as the quarantine lasts, we will support any government policy, reducing risks and everything that public order imposes," Maximiliano Babino, general manager of Western Union, said with resignation to iProUP.
For practically two years, Argentina has become a recipient of remittances. That is, the volume of money that enters is greater than that which is sent abroad. This greater number of transactions comes from Spain and the United States, which account for 30% of the total. And this is one of the pillars of Western Union in the country.
By the quarantine, from the company they indicate that the digital service (bank transfers through the web) "works without problems". But this only represents a minority of users.
A similar scenario goes through Cobro Express, an inland services company that launched its remittance service a year ago with a focus on small and medium-sized towns in Santa Fe, Córdoba and the Province of Buenos Aires.
Ignacio Picatto, operations manager, details iProUP that, despite working with a wide network of shops -with 2,000 stores in 900 towns and cities- today is "100% suspended". "They are all affected by the same situation," he regrets.
Many of those who use this type of service are people who are unbanked and need to send or receive money to cover their daily expenses.
From the different companies consulted by iProUP they agree that the customer profile of remittances is "recurring". In other words, it resorts to this service every month, so the advance of the pandemic and the restrictions to mobilize transform the current context into a highly pressing situation.
This is where digital platforms come into play that make it possible to transfer without having to move to one place. Firms operating in this segment have gained a lot of ground in the Argentine market and project a scenario of sustained growth.
One of the best known is Paypal, the American company that operates as an online transfer system, which landed relatively recently in Argentina. It develops its activities with Nubi, a local capital firm that acts as a payment processor. That is, it links the Paypal user with a bank account.This platform experienced significant growth since its arrival, and although it is true that since last September they took away the possibility of transferring from a bank account to a Paypal account (now, it can only be done between PayPal users), from the company they acknowledge that this was more of a "secondary service".
Indeed, the highest volume of fintech operations comes from the possibility that a user from Argentina may receive money from abroad. The system is very simple: a person from abroad makes a transfer to another with a Paypal account (in Argentina) and receives the funds in their savings account, pesified to the official dollar.
As this system means that you do not need to move from your home, the business was not affected by the quarantine and both the volumes and the number of transactions remained stable in recent weeks. The same happens with TransferWise, a remittance company of European origin that is based on digital transfers and has landed a few months ago in Argentina.
The firm had grown a lot since its arrival in the country - due to its costs and low commissions - but it experienced a standby based on the regulations imposed in recent months in the fintech market.
Certainly, these online services are widely used because, in addition to their practicality, they are usually cheaper than traditional ones. For example, Nubi for the withdrawal from the Paypal account charges 0.5% for shipments greater than $ 2,000 and $ 10 for transfers less than that amount.
In dialogue with iProUP, Mariela Sandroni, Chief Marketing Officer of Nubi, highlights that the user experience is "well cared for" and they constantly monitor it so that they feel comfortable with the services it provides. "We seek to make the online experience as simple as possible," he says.
In this sense, according to what iProUP could know, an ambitious project by Nubi to launch a prepaid Visa card - similar to the Mastercard offered by Ualá - that targets a target market of 13 million unbanked users, would already be more than advanced.
"We are accelerating the development of the digital account," they are enthusiastic from the signing, and recognize that they "put sixth" to speed up the exit. "This project is a high priority," they say. In principle, the card will be free, it will allow transfers and you will enjoy "all the benefits of the Visa network". Meanwhile, Paypal and TransferWise recently added a new competitor in the local market: Xcoop.
It is a company of local origin that openly declares that its objective is to be - nothing more and nothing less - the true competition of Western Union in Argentina and the rest of Latin America.
As an example, they indicate that they want to do the same as TransferWise in Europe: compete with Western Union with an innovative digital proposal that adapts to local needs, is transparent and offers lower costs to the user.
With a focus on local remittance demands, Xcoop's main clients are the Colombian, Peruvian, Paraguayan, Bolivian and Venezuelan communities residing in the country.
It is not a small market at all: for example, about 800 million dollars are sent to Paraguay a year, an amount similar to what goes to Bolivia, while another 600 million dollars arrive in Peru. These people, who make 12 or 13 shipments a year for their families, today are finding it difficult to transfer to their countries of origin. "You have the problem that families depend on that income that comes from Argentina," Alex Torriglia, CEO of Xcoop, tells iProUP. The mandatory quarantine, and the corresponding closure of traditional remittance delivery locations caused an exponential rise in Xcoop users, which although it made its debut in December, only a month ago began operating in the domestic market.
According to sources from the company to iProUP, about 200 people were joining the platform every week, but that number shot up to 13,000. And in the firm they hope that this growth will continue to be constant or even greater: they aim to have half a million people in the course of a year.
In this sense, the company is playing hard under the new and extraordinary situation and, within this framework, it started an "aggressive" campaign by which it offers free shipping services to Bolivia and Peru. In this framework, Xcoop launched a prepaid Mastercard in Mexico that may be available in the rest of Latin America shortly. "We aim to grow in remittances, to expand to the unbanked market in general and then to the market for payment of services," explains Torriglia.
"The issue of remittances is a huge problem and is not being addressed in government spheres," adds the company CEO, who held talks with ANSES officials to explore the possibility of issuing a prepaid card for retirees who do not they use a debit card through Banco Nación.
Meanwhile, Western Union indicates that they are not going to change their strategy due to a situation that they consider "circumstantial" and aim to reinforce the image of a leading company. Fintech companies, for their part, advance against the clock to attract the unbanked public and take it to the digital world.