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Vitual wallet "kills" cash: Why mobile payments phone grow in the midst of crisis and falling consumption

Vitual wallet "kills" cash: Why mobile payments phone grow in the midst of crisis and falling consumption
60% of Argentines already use one of these apps. The leader is Mercado Pago, but there are a large number of alternatives. The keys to the phenomenon
18.10.2019 18.49hs Finanzas 4.0

Cash is giving prominence in pursuit of other payment alternatives. And this that happens in the world, also has its correlation in Argentina, where virtual wallets enjoy high acceptance and add a greater number of users every day.

From the Insights Division of the consulting firm Kantar put figures to the matter: 6 out of 10 adults recently made a financial transaction through their cell phone. The most likely are those who are between 35 and 49 years old (67%) and enjoy good purchasing power (73%).

Of those who already used their phone as a purse:

- 94% said the experience was good to excellent

- Two thirds assures that thereafter he prefers the mobile to acquire a product

- Of those who did not use this type of platform, 40% acknowledged that it is likely to do so in the very short term

"The way in which consumers manage their finances and relate to money is changing at an accelerated pace. Transporting cash is uncomfortable and insecure. Instead, virtual wallets are practical, easy to use, increasingly accepted and allow you to make transactions with discounts on several items, "they say from Kantar.

In this context of "fertile land" for the growth of electronic money, options began to flourish that fight to gain prominence in a segment that has as a pioneer and leader of Mercado Pago, the wallet of the company led by Marcos Galperín. These are some of the numbers that give an account of his good present:

- More than 16 million QR transactions after its launch (May 2018)

- About 3 million QR payments in a single month

- More than 400,000 affiliated businesses (50% small businesses)

- Three million unique payers

- 10 million application downloads

- Growth rate several points above inflation

The highest concentration of use occurs in the Federal Capital, Conurbano, Córdoba, Mendoza and Rosario. The items with the most participation are fuels, gastronomy, supermarkets and parking lots.

"While we do not see a value proposition similar to that of Mercado Pago, we welcome the fact that there are more and more alternatives so that users can have a better service," Paula Arregui, senior VP of Mercado Pago, tells iProUP.

The executive adds that "the fintech industry is developing in the country and there is a growing number of startups and companies offering virtual wallets." However, there is a long way to go: with three million unique users, there are still 37 million Argentine smartphones to conquer.

A growing sector

From the Central Bank they point out that almost 80 million card payments and 20 million transfers were recorded through digital wallets only in the first six months of 2019, while they completed almost 20 million transfers. This represents a growth of 150% and 280% respectively in relation to the first half of 2018.

While the industry prepares for the interoperability of QR (that is, that all apps recognize any code, even that of competitors), the mechanisms of different players that seek to take a market share from Mercado Libre were put in place, in addition of conquering a territory still unexplored.

"Digital wallets are growing in the local market with higher rates than any other alternative," Jorge Larravide, Link Commercial Manager, tells iProUP. The application of the firm, VALEpei, already exceeded 200,000 active users, while the amounts of money transfer and payments advanced 600% between just over two years.
In number of operations, this wallet averaged 33 transactions per user, almost four times more than ATMs (9), of which five corresponded to withdrawals.

For Larravide, the work of Mercado Pago paved the way for the arrival of more players: "The references allow to generate teaching. The competition from a collaborative point of view contributes to create new solutions and increase the volume of operations of the entire market in your whole. "

Clash of Giants

"If we compare ourselves with other players, we have the most complete value proposition for both buyers and sellers, that's why we are the largest digital wallet in the region and we have the largest number of downloads," says iProUP Arregui, Mercado Payment.

While it is true that the Mercado Libre solution is the most accepted, the large number of players that appeared led to new opportunities that open the door for users to choose from a varied range of solutions.

Buying and selling dollars, earning interest with the "idle" money in the account, creating payment groups and securing the mobile device are some of the benefits proposed by companies. In general, all provide account opening and free maintenance. In addition, the digitalization of daily actions is consolidated and massified, such as the SUBE charge, payment of services in shops and cell phone recharge, which develops new habits in the consumer.

One of the most recent options is Naranja, which entered the fintech world with Naranja X. "That there is more competition is always positive. It drives to be better, more agile and to listen more to the customer. The great opportunity is to digitize the cash, in complement and eventually replace physical wallets with virtual ones ", assures iProUP Gastón Irigoyen, CEO of the firm.

He also argues that competition generates optionality: "Virtual wallets, like many other technological products, are not exclusive but can live in people's phones. Especially when we see such different value propositions."

Demián Gil Mariño, Director of Iungam, Rapipago's new mobile solution, says that the retail payment business continues to expand robustly and that wallets grow as initiators. "There is a virtuous ecosystem in which all the tools and proposals that the company has accompany the transactionality of the client," he notes.

However, it ensures that when interoperability is achieved, a true path to digital and financial convergence will begin. Another solution with a presence in the market is Todo Pago, by Prisma; PIM, from Banco Nación; and Plus Payments, from Petersen Group.

A world of options

Although it is a market that began to expand in recent years, the adoption of solutions such as Ualá, with its prepaid MasterCard and its mobile application, frequently incorporate new functions to attract users.

In this regard Pierpaolo Barbieri, founder and CEO of the company, announced the launch of a pilot test by a common investment fund for users of its fintech. This new function allows you to invest from $ 1 with no maximum limit. Its costs are 2% and, according to the company, it is already included in the returns generated.

The product operates with a low-risk fund, called SBS Savings Pesos FCI. The rate of return is 45% and invests in fixed-term deposits, sureties, money market (national short-term debt) and paid accounts.

Beyond the solutions of renowned players, there are new actors who are preparing to disembark in a boiling market. An example is given by BKR. This solution is clear from Bankar Digital, a financial company that has been working with its own credit card for some time, but which has been developing its own wallet two years ago.

"Initially it was simpler but we were adding functionalities. With that growth we saw where the market is going at the local, regional and global levels," explains Hernán Brennan, director of BKR, to iProUP.

The application works independently of your credit card as it bets on "zero cost", with a target focused on semi and unbanked, especially young people. Currently, the firm is in the final stage of developing its wallet, which they define as "an intermediate product between Mercadopago and Ualá".

While interoperability is in "stand by", BKR is already deploying its commercial network with its own QR in Federal Capital and signed an agreement with Mastercard to offer prepaid card. It also allows paying services, has accounts with CVU, payment groups and a "keyboard" that integrates with WhatsApp and Instagram to transfer from any app.

"Our business model goes for the extras, link the information we have to stay and offer other services such as insurance," says Francisco Chaves, commercial manager of the company. In this sense, it is already negotiating agreements with insurance and stock market firms. "The consumer today can choose and not necessarily settle for a canned product without options," says the executive.

In another order, it values ​​the evangelization of Mercado Pago and its weight when developing new opportunities for the entire sector. "It is a strong competition, but there is a very large square that is just opening," they conclude from the firm.

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