A few years ago, running out of cash was a problem. You had to go out and find an ATM and trust that you had funds. During holidays or bank stoppages, the chances of finding cash were even lower.In 2017, Visa and MasterCard presented in the Extra Cash and Cash Back markets, respectively, which allow us to withdraw cash when buying at a pharmacy, supermarket or service station and pay with debit.
In this way, users avoided going to a bank, while this service reduced costs for retailers by reducing the amount of flow to be transported. The incursion was a success: Extra Cash grew 40% in number of transactions and 60% in volume operated in 12 months, from Prisma Medios de Pago.
The collection networks also saw this business and went out to offer another tool to facilitate obtaining tickets. "The growth of cash extraction is in the order of 40% per year, just below inflation, an average operation is $ 5,000", reveals to iProUP Gustavo Gómez, CEO of RapiPago and president of CAECEIS, the chamber that groups to the firms in the sector.
In April of last year, the Central Bank regulated another mechanism to provide the country with more terminals: authorize the existence of extrabanking ATMs. That is to say, that from then on it was no longer necessary for them to be within a financial entity.Argentina is one of the nations of the region with the lowest density of ticket vending machines: 60 per 100,000 adults, against almost twice Brazil (120) and also below Uruguay (90).
Experts agree that at least 50,000 more teams are needed to cover the territory. That figure is otherwise ambitious, considering that there are currently only 16,500 (one third) deployed by the two networks that, so far, are distributed throughout the market: 9,300 belong to Link and 7,200 are owned by Banelco.
In this frame, a third player appears who comes to kick the board. This is Octagon, a company created in the United States 12 years ago by the Argentine Sebastián Ponceliz and that will seek to place its terminals in kiosks, supermarkets, service stations and number of stores in other areas.
Not only that: it promises that its ATMs will have state-of-the-art functionalities and with a model in which traders and investors can also obtain profitability in a virgin market at the local level.The business
After several delays related to the obtaining of licenses in the country and the signing of agreements, Octagon prepares its launch and advances with its headquarters in the downtown Buenos Aires.This is the office of Banco Interfinanzas, which the firm (Octagon) is in the process of acquiring since last year, where one of these terminals is already working but without connection to the network.
"Although the acquisition had to start formally on December 1, the whole process was long and far from automatic, that was the start date," says Begoña Pérez de Solay, general manager for iProUP. Argentina of Octagon.
The process was delayed because Visa processed these transactions locally through Prisma and this year brought its VisaNet platform to the country. However, with MasterCard and the firm is operational.
The company has the acquisition licenses of the networks belonging to both credit card brands, so it "asks" these companies for information instead of connecting to the Link and Banelco networks."The transaction is processed by Visa or Mastercard, passing through the clearing house, the presenting bank (Interfinanzas) receives the funds on behalf of Octagon and liquidates those who charged the ATMs," the executive explains to iProUP.
The latter are the owners of the premises where the terminals will be located and are a vital part of the ecosystem, which offers the possibility of participating in this business as:
- Investor: acquires the equipment and Oddissey Group - owner company of Octagon - is responsible for finding and contracting the location
- Tenant: gives its space for the company to install the cashier
- Investor tenant: the merchant can acquire a terminal and install it in his businessThe prices of the equipment start from $ 8,500 and generate profitability since each operation has an associated cost, which is warned the user. But, in addition, they generate certain benefits to the merchant, whether or not investor:
- You can "unload" the money from your box, avoiding flow transport costs
- Generates more traffic from an audience that otherwise would not have gone to the local
"Currently, we have more than 1,200 ATMs already sold: about 200, to private investors and more than 1,000 to an investment fund." Many of them have already entered production and have a closed location, among supermarkets, pharmacies, kiosks and collection networks ", remarks Pérez de Solay.From the firm expect a strong demand for these equipment. In addition, it is preparing a building in the Technological District of Parque Patricios to store the hundreds of terminals that will be brought from China. It will also install a laboratory there for repair, updating and tuning of ATMs.Cashier 4.0
The Octagon network is based on a platform that goes beyond the terminal: the final idea of the company is that they are a "marketplace" of third-party services.
"We will start with cash withdrawals and transfers, so that a banked person can send money to an unbanked person or vice versa, or between two unbanked people," Pérez de Solay reveals to iProUP.
According to the directive, your MoneyFi wallet allows you to enter the DNI and the document number of an individual to generate an extraction order. Thus, you can pass a token (a kind of key) to obtain money from a cashier of the Octagon network or store it in your virtual wallet and remove it little by little."The cashier offers a cash-in service to all virtual wallets," says Pérez de Solay. In effect, that is the strategy of the firm: invite the fintech so that the Octagon network is a showcase for its products.
"We have been negotiating with a large number of companies, with some of which we are more advanced: loan liquidation will be soon, payment of services will also be this year and what is coming is the granting of loans", the executive affirms.
In addition, the firm has agreements with virtual exchange houses to enable the sale of Bitcoin and other digital currencies through ATMs, while preparing its own currency - which will also be called MoneyFi - to provide low-cost international transfers.
"We are also very advanced in prepaid cards, with a card printer integrated in the ATMs so that the users of the wallets can take the silver or a plastic," says the country manager of Octagon.The directive states that fintech may also distribute their cards through the terminals and save the cost of delivery. Especially, prepaid (Mercado Pago and Ualá offer, for example). "In other countries they have a strong development, especially among the unbanked, since they do not require a line of credit and allow digital services such as Netflix."
The company has an agreement with the manufacturers of Puloon ATMs and with GRG, which is the main manufacturer of ticket machines worldwide. The latter offers high-performance terminals, such as fingerprint reader, touch screen, barcode reader and QR for the payment of services, among other options.
"This is a supernovated model for the retail market, since it has a recycling module, the employees of the merchants can enter the money and the terminal performs all the treasury management," says Pérez de Solay.
He adds: "The ATM validates each ticket that is deposited, stores the serial number in its memory, orders it in the booths (according to the name) and distributes it to the people, which makes a very efficient use of money, since that money ends up coming from extractions ".Pérez del Solay points out that, although the main customer is the shops "to provide an additional service to their customers and at the same time solve their cash handling costs", the vending machines "can be located in different areas: from a company, for its employees, even at the door of a building ", to lower the expenses of expenses.They will not be one of a kindWhile Oddisey is moving forward with its terminals, Link and Banelco also plan to locate their equipment in stores. As an advantage, those who have a salary account or charge their social plan, will not pay for the extractions.
The company that has already started is Link, under the brand Cajeros Express: it has already signed 420 contracts with kiosks, service stations and other premises, of which about 300 computers are operating. They hope to close the year with 500 terminals.
"The investment in the purchase of the ATM and the initial installation is approximately US $ 7,500. It is recovered in just six months, considering the savings of the transport of flows and the income from the commissions of operations", explains iProUP Jorge Larravide, commercial manager of Link.Valeria Melchior, Product Manager of the Processing Division of Prismas Medios de Pago, points out to this medium that Banelco is preparing its own service, which will be launched "in the short term".
According to Larravide, there are several models available, but they are "simple" terminals that allow for fewer transactions compared to the banking equipment that has other modules and, obviously, have a higher cost.
"For example, they do not have the recognition of banknotes without enveloping, front and back checks." The most expensive, which is the recycling ATM, pays the extractions with the money that he recognized through deposits, "he adds.
For its part, the American Athena is the only one that offers vending machines in Argentina to acquire digital coins. "To buy coins, we enter pesos and the ATM dispenses Bitcoin and another currency, and to withdraw pesos, digital currencies are sent," says Matías Goldenhörn, Athena's Director of Operations for Latin America.Users should only insert tickets that the team recognizes to be able to buy their virtual currency. They will obtain a ticket with a QR code that can be read with a digital coin wallet to carry out the accreditation.
The ATM market is in full expansion stage. And the shops are attentive to this new tool to capture new opportunities in a stage where the crisis and the increase of ecommerce undermine their profitability. Thus, the digital economy shows its transforming face: while it reduces business, it generates others.