The confirmation that the fintech segment is not a passing fad, but an industry with unlimited expansion potential, came Monday from the hand of Apple, which caused a real earthquake with the launch of its Apple Card.
It was not a movement in the famous San Andreas fault that crosses the California coast, but a cimbronazo that took by surprise the world of banks and finance: the largest company in the world, the paradigm of what is the industry technology, he made his big bet in the payments segment.
It is clear that the final goal is to dominate the space of digital payments. The company confirmed that it is on track to exceed 10 billion transactions through Pay this year and highlighted 70% of merchants in the United States already accept the platform.
In this context, the launch of your card is of vital importance, since it will allow you to expand to countless businesses and establishments around the world that today do not accept payments by smartphone.
Regarding "plastic", which will actually be made of titanium, users must register in the Wallet app, an action that takes just a few minutes. Thus, they can track their purchases, balances and maturities, directly from the cell phone.
A very particular detail of the product is that it does not have a number, CVV, expiration date or user signature. All that information is stored directly in the application.
An important advantage cited by Apple in its presentation was the new rewards program called Daily Cash: if Apple Pay is used in any location, the company returns 2% of the purchase; if it is purchased directly from Apple, it will be 3%.
The physical card, meanwhile, will have a refund of 1% when used in stores.
This refund is made in money and not in points or coupons; therefore, it can be used for other transactions or to be sent to other users. The company also promised that Card will not have associated costs, commissions, or international rates, and advanced "the lowest interest rates."
On the other hand, like many of the company's products, privacy is a key item.
"Apple does not know what you bought, where you bought it and how much you paid for it," said Jennifer Bailey, vice president of the Pay division. This information will remain on the phone and, they promised, will not reach their servers.
To carry forward the size of the project, Apple had to go out looking for companies that would allow it to sustain the product. Therefore, he added two weighty allies that will help consolidate the proposal: Goldman Sach and Mastercard.
The latter adds another important partner in its battle with Visa for the control of the fintech segment in its credit leg. The signing of the two circles is determined to lead this new era of payments and has taken concrete steps to achieve it.
The "Mundial fintech" of Visa and Mastercard
The digital transformation was the initial whistle so that the two most recognized credit cards in the world compete for the future of digital payments.
While Visa retains a larger share of the global market, in the "digital world" Mastercard is leading the main bets to dominate sales with electronic means of collection.
In fact, the signing of the two circles was the one that most actively supported the new generation of digital payment means from the start. For example, it is present on the card issued by PayPal.
Also in those that offer N26 and Nubank, the largest digital banks in Europe and Brazil, respectively. In addition, they also provide their plastics to Argentine fintech Mercado Pago, Wilobank and Ualá, among others.
However, the competition goes beyond plastics, but offer a battle at the international level. Recently, Visa and MasterCard bid to stay with Earthport, a company that offers international transactions "low cost" based on cryptocurrencies.
This new way of transferring money between different countries is much cheaper than the traditional one and is expected to generate a market soon over US $ 30,000 million annually.
The first to approach was Visa, which was willing to put on the table a whopping US $ 255 million. Mastercard did not take long to arrive with 305 "green sticks".
Visa "put the cry in the sky" and far from resigning to his rival, he redoubled the bet: he offered US $ 320 million as "last offer".
Mastercard asked shareholders to wait before making a decision, but gave a change of direction: in early March it closed the purchase of Transfast, a company that makes money transfers in 125 countries in Asia, Europe, Africa, America and Australia . That is, more than the 90 in which Earthport operates.
In effect, the Transfast network has integrations with 300 banks and financial institutions with which it connects through its application programming platform (API) to streamline cross-border money transfers.
Now, what is the interest in these international payment processors?
The main objective is to lower the costs of these transactions, thinking of an electronic commerce on a global scale that shows signs of deepening.
"Visa and Mastercard seem to be interested in reducing the number of intermediaries with which they handle international transfers," says Juan José Méndez, manager of Marca de Ripio, to iProUP.
The key here is not the use of virtual currencies per se, but the blockchain platform -in this case, Ripple-, a technology that promises to revolutionize the way information is transferred in a faster and more reliable way.
"It does not matter what technology is used, although the chain of blocks is one of the most promising to solve this problem," says Alberto Vega, Latin America manager of BitPay, to iProUP.
"The game has several edges, mainly the construction of liquidity in different markets," he says.
Argentina, another battlefield
While globally bid to stay with different startups that promise great profits in the future, Visa and Mastercard play a separate game for the digital transformation of their businesses in Argentina.
In effect, the brand of the two circles has already surpassed the score and promises to lead the advance of new forms of payment.
Mastercard opened the score last year, when it launched the contactless cards, a chip-surpassing technology and magnetic stripe based on the following pillars:
- The customer supports the card on the reader to pay, without having to deliver it to a third party.
- The plastic has a chip with encrypted data that allows not to "clone" the card.
- The operation does not require the presentation of the DNI. Neither the issuance of the coupon nor the signature of the client in operations of up to $ 1,000.
- The cards can be "virtualized" in an electronic wallet, allowing to pay when placing the cell phone over the terminal.
Within the Argentine banking, they give account of the local "backwardness" of the most used brand in the world.
"Mastercard last year lost a mandate to the entire region to migrate plastics to contactless, Visa has 'fallen asleep', it has only recently done so," iProUP points out to a high source from one of the country's most important private banks.
The truth is that Mastercard's digital plan is underway for a while and the replacement of plastics is only a small part.
The other example of his great commitment to the Argentine market consisted in interpreting the strong progress of the fintech during 2018. Such is the case that is the "preferred" card by these startups, such as Mercado Pago (in alliance with Banco Patagonia), Ualá and Wilobank . The latter, until incoporated contactless.
The case of Marcos Galperín's company is special, since the provision of technology was also agreed upon in order to authenticate (log in) the users of Mercado Pago to guarantee the security of operations and to provide them with greater speed.
In fact, both firms are working on the tokenization of the cards. That is, to encrypt the 16 digits of the plastic to only serve in that operation, and under other constraints.
Thus, it deployed the MDES system (Mastercard Digital Enablement Service), which has already been adopted by the banks in the region.
Visa, for its part, was more timid in this sector and it was not until 2018 that it decided to join this boom with Brubank, the 100% digital bank founded by former Citibank Juan Bruchou.
Today, it could be said that MasterCard is the only contactless card in the market (Visa is just introducing its plastics) and has been playing for a long time, beyond the imminent implementation of this technology by its competitor.
"To introduce a new technology and induce a new behavior, we launch very aggressive promotions that attract attention, a huge jump in sales is registered, since the level of transactions is higher at the end of the promotion than at the beginning. residual that is sustained over time ", explains Martin Lang, Country Manager for Argentina of Mastercard.
In dialogue with iProUP, the manager indicates that the next one will be to extend the service to debit cards and with prepaid balance. He also assures that they managed to create a "virtuous circle" with banks and businesses, since now they are "going to look for" to take advantage of the contactless advantages.
In total, the firm has close to 500,000 "contactless" accounts in Argentina, a number that Lang still considers "low" for the tens of millions that make up its plastics park. From this, he is excited by the potential of the evolution of this modality.
According to The Nilson Report, it is an unequal fight: globally, Visa sextuples the card market of its competitor. But the match is long and the digital transformation suits Mastercard, which in 2018 showed for the first time in 48 years a growth of its market share in simultaneous with a decline of its rival. And maybe Apple is the partner for success.
