Long ago, the use of credit cards entailed a certain status among those who were holders of them. Having a plastic was not for anyone in Argentina, given its low level of banking and the restrictions imposed by the entities.
Then, that panorama was mutating: more people could have bank accounts and packages and, recently, there was a marked growth of "cardholders" after the emergence of fintech.Thus, what was reserved for a segment of the population years ago, today became a fundamental tool of access to the new economy, marked by digital payments.
Currently, the Argentine fintech ecosystem is in good health and this contributes to the fact that the total of "unbanked" (50% of the economically active population) decreases month by month.
According to the latest survey of the Argentine Chamber of Fintech, there are already more than 200 companies with operations in the country. Of course, not all of them focus on digital payment businesses nor are they part of the "neobank" segment.
- Within the first group (digital platforms) two great players stand out with their own card proposals: Mercado Pago and Ualá, which consolidated their competitive strategy thanks to the millions of plastics issued throughout the country
- The second platoon is made up of "100% digital banks", such as Wilobank and Brubank, which are governed by Central Bank regulations and have the same regulations as their physical counterparts. They operate with Mastercard and Visa, respectively.
Within this last group, a third player, Rebanking (from Transatlantic), is preparing to launch his proposal in partnership with American Express. In addition, new players are added to the sector: Orange, the main issuer of cards in the country, which will begin operating with a fintech division; and Banco Santander, which will do the same with Openbank, its great global commitment to digital banking.As if this were not enough, the arrival of Nubank, the Brazilian giant cataloged as "the largest fintech in the west" is awaited. Thanks to its alliance with Mastercard, it already has more than 5 million cards issued only in its country of origin.
Minimum staff and no circulating physical money. The so-called "4.0" bank allows operating with low costs, immediate access to the financial system and with a card available in a few steps. BCRA statistics only confirm this boom: during 2018, banking operations doubled through digital media.The neobanks, with a "contactless" spirit
The managers of the digital banks repeat it over and over again: although they are part of the fintech ecosystem - due to its 100% digital DNA - its structure responds to that of a made and right bank.
Thanks to lower barriers to entry, their guns point to monotributistas, freelancers and employees who are currently customers of traditional banking. At present, Wilobank and Brubank are the exponents of this sector, which is growing steadily and breaking records for the activation of accounts month by month.Born in 2016 as Wanap and then renamed Wilobank, the bank of Eduardo Eurnekian and Guillermo Francos (former head of the Province Bank) was the first to debut in this niche.
One year after its commissioning (debuted on June 30, 2018), it boasts of having issued more than 90,000 plastics between credit and debit. As additional information, these are International Mastercard cards with band, chip and contactless technology.
The product, moreover, is consolidated by the "young public", more adept at incorporating new proposals. "70% of users are between 20 and 45 years old", underlines iProUP Guillermo Francos, in charge of the company. It currently has more than 65,000 and the goal is to overcome the 100,000 barrier in December of this year.
"We look very optimistically at our activity. For half of our clients, we are their first bank," the executive adds, and highlights that the secret for their market to grow lies in the economic policies that will be implemented as of 11 December.
"The next government should aim to consolidate the purchasing power of the company. That means greater transactionality and, therefore, new accounts," says Francos.In this regard, he details that Wilobank customers' consumption is varied, but similar to that of a traditional bank. The bulk of transactions occur in supermarkets, in the purchase of household appliances, fuel loading and tourism.
"When it comes to consuming, there is the particularity that many use our cards to access Mastercard Contactless Week and take advantage of discounts. This, as a result of which we were the first to offer this technology in the country," reveals the director of the digital bank.
The firm's last bet in the plastics segment is Wilocard, "a low-limit and rechargeable credit card that can be accessed by all interested parties, including those who do not have a credit history or do not have updated Veraz data," he reveals. Franks
The product, which also has the support of MasterCard, allows national and international purchases and access to promos in installments (such as Now 12), without the need for a bank account.
Brubank, for its part, continues to work on its consolidation within the local market. The company founded by a former City, Juan Brouchou, is committed to operating as a true innovative hub. Among its ranks has Diego Pando, founder of Bumeran and Digital House, and Pablo Sánchez, former Product Manager of Mercado Libre.
This background, 100% entrepreneur, is reflected in the product, which began operating in September 2018 as a "test mode" between acquaintances and relatives to be launched in March to the market.
Brubank accumulates more than 40,000 plastics issued and aims to double that figure at the dawn of 2020. The company, which offers credit and debit cards, was the first to have Visa Contactless products in the Argentine market.Now, with the sale of 15% of its shareholding package to Canadian tycoon David Thompson (chairman of the Thompson Reuters board of directors), he is betting on an aggressive expansion thanks to the support that gives him fresh money in his coffers.
"With David we share the same values and long-term vision about the company: the commitment to technology and continuous improvement in the customer experience. This will allow us to position ourselves as the best digital bank in Argentina and the region," Bruchou is excited.Prepaid, wild card of the unbanked
Pierpaolo Barbieri is the terrible enfant of local fintech. At only 32 years of age, the Argentine graduate of Harvard created Ualá, which became one of the main local payment platforms. It operates since 2017 and has 1,100,000 prepaid cards issued.
Although its main objective is to work on financial inclusion, Barbieri emphasizes that there are more and more people who choose the company.
"Currently, 5% of our user base are minors who use Ualá not only to enter the financial system but also for financial education. Another 3% corresponds to foreigners who are living in Argentina, since it is simple to process and easy to use, "he says.As Barbieri points out, "the numbers reveal that more than 3% of Argentina already uses Ualá". In the demography of young adults (20 to 24 years old), it is more than 9% of the country.
For the executive, the "prepaid" is just the spearhead of a product portfolio that revolves around digital. "What started with a card today includes payment of services, free and current CVU and a set of constantly expanding products and services."
A highlight to this type of cards is that payment processors take them as a credit card. This means that the "unbanked" access promotions and discounts in shops without having a bank account.
While all this happens, Mercado Libre continues with the aggressive expansion of Mercado Pago, its financial leg that is gaining more prominence in the company's revenue cake.
While QR is the great "pampered" of the firm of Marcos Galperin, its card business is advancing steadily throughout Latin America. Currently, Mercado Pago has more than 3 million prepaid cards issued in the region.
"Today it works by mirroring the digital balance that people have in their account. One can go to the supermarket and make purchases using the digital account, go to a cashier and withdraw the balance in a physical way or even access services such as those of Cabify, Netflix and Spotify, for which you need a yes or yes card, "says Paula Arregui, VP of Mercado Pago Product.The product, launched in Argentina in February of last year and in Brazil at the end of 2017, was strong among users. Despite the QR thrust, it does not lose acceptance and contributes more and more to the firm's total payments (US $ 6.5 billion in the second quarter of 2019). In total, 182 million transactions through all its services.
The company's next step will be the incorporation of contactless technology in its plastics, in the hands of its partnership with Mastercard, which is strongly committed to the expansion of this technology in Latin America.
The main players in the sector have no doubts: financial inclusion is 100% digital, but it has its physical support on the cards. They are fundamental in the crusade to reduce the use of cash and, at the same time, a source of benefits for all those who until now had not been able to access such a solution.
Credit, debit or prepaid, everything serves to "twist the court" and beat the use of cash and take the Argentine market to a new stage in its banking process.