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September / October 2020
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SUBSCRIBE NOW THE LEADING PAYMENTS MAGAZINE PCM is an award-winning magazine published every two months with an audited circulation of hard and soft copies. Readership comprises senior executives responsible for managing all types of payment programmes. Subscribe now! Call (+44) 1263 711800 paymentscardsandmobile.com
September / October 2020
Volume 12, Issue 5
The world keeps on spinning…I think that this
is the first issue of the year where I have felt
like business has normalised. Production Team
I appreciate that none of us are going to be getting on a plane any time soon to visit Alexander Rolfe
Editor-in-chief and publisher
clients or attend conferences, but I get the feeling that the payments industry has settled
Tel (+44) 1263 711 800
into the new reality of what working through a pandemic looks like. alex@paymentscm.com
So, just to upset that Apple cart, along comes Brexit. The subject has probably grown as James Wood
old as COVID-19 in terms of we are sick of hearing about it, but we must reflect the fact that Managing Editor
james@paymentscm.com
it is happening.
Wendy Sanders
We’re now less than 90 days away from Brexit without much sign of a comprehensive trade Head of Business Development
deal. James Wood investigates what this means for payments in the short to medium Tel (+44) 1263 711 801
term, from passporting rights to staffing, interchange rates and digital ID. wendy@paymentscm.com
Gemma Rolfe
To keep the mood upbeat and because we are eternal optimists in the editorial team, we General Manager
want to keep focussing your attention on high growth, high opportunity markets. Latin Tel (+44) 1263 711 800
America fulfils this remit. gemma@paymentscm.com
Gemma Haywood
Investors and intermediaries are flocking to Latin America, lured by high growth rates
Subscriptions and General
in everything from e-commerce to mobile wallets. But stubbornly high cash use, a low Tel (+44) 1263 711 800
banked population and historical economic factors – not to mention diverse economic gemma@paymentscm.com
development – all present challenges.
Adam Unsworth
Head of Design & Digital
Finally, we point the mighty pen in the direction of safety. Last week the FinCEN files blew
Tel (+44) 7932905744
the lid on the global banking industry and the way it tackles money laundering. The adam@paymentscm.com
banks claim they are doing what is demanded by the regulators, common sense says the
regulation is not stringent enough with its oversight. Printing
Micropress Printers
But what more can be done? The first half of 2020 saw fines for money laundering almost
double compared to 2019. So are much-hyped Artificial Intelligence and Machine Learning
Editorial Advisory Board
techniques catching more crime – and can regulation keep up with criminal ingenuity?
John Berns
Managing Partner, Accourt
Alexander Rolfe,
Sylvie Boucheron-Saunier
AlexRolfe
SVP Financial Institutions, North
America & Europe, ACI
Chris Harris
Editor-in-chief and Publisher, VP Sales Performance & Global
Payments Cards & Mobile Accounts at Ingenico Group
Siobhan Moore
linkedin.com/in/alex-rolfe-6176831
Partner, Global Head Cards and
Payments at Locke Lord LLP
Fiona Wilkinson
PCM Board Member
All rights reserved. No part of the publication may be reproduced or transmitted in any form without the
Payments Cards and Mobile
publisher’s prior consent. While every care is taken to provide accurate information, the publisher cannot
The Stable, Hall Yard, Kelling
accept liability for errors or omissions, no matter how caused.
Holt, NR25 7EW, United Kingdom
© PaymentsCM LLP 2020 Payment Cards and Mobile™ is owned and published by PaymentsCM LLP ISSN 1759-829X +44 1263 711800 / paymentscm.com
IN THIS ISSUE
06 - 10 MARKET ANALYSIS AFTER COVID-19: LIFE, BUT NOT 26-27 MOBILE PAYMENTS
AS WE KNOW IT…
CONTACTLESS PAYMENTS TO
SMES ARE POORLY SERVED
Three months ago, PCM brought you the SOAR TO $100 BILLION BY 2026
IN PAYMENTS. IT’S TIME FOR
world’s first in-depth analysis of how the
CHANGE.
payments market has been affected by The contactless payment market exceeded
Recent research has revealed that SMEs COVID-19. Now we update our analysis with $40 billion in 2019 and will grow at 15
are vital to Europe’s economy as the fresh thinking on life in payments after percent CAGR from 2020 to 2026. Global
world seeks to recover from the effects COVID-19 and what happens next.. shipments of contactless-enabled
of COVID-19. Despite their importance equipment are projected to reach 15 billion
to the overall economy, small firms units by 2026, as growing demand from
11 WISEASY - QR CODES:
have suffered disproportionately during consumers and merchants to reduce
THE DIGITAL REVOLUTION’S
this crisis – and they’re not happy with transaction and billing times propels
NEXT STAGE
the service they’re getting from banks, market growth.
acquirers and processors. It’s time to
19 WORLDLINE - E-PAYMENTS:
lose the complacency and serve smaller APPLE PAY FACES ANTITRUST
merchants better. LATIN AMERICA JOINS THE
INVESTIGATION FROM EUROPEAN
RACE FOR THE DEVELOPMENT
COMMISSION
OF ALTERNATIVE PAYMENTS
E-COMMERCE IN AFRICA:
METHOD The EC is launching an investigation into
PROMISE FULFILLED?
Apple Pay and whether it undermines
In our last issue, PCM’s lead feature 22 RISK & COMPLIANCE competition by limiting access to NFC for
examined the potential and risks contactless payment in stores.
associated with African payments. Now
AUSPAYNET REPORT SHOWS
research from global payments firm PPRO
SHARP DECLINE IN CARD FRAUD SMART CHECKOUT
claims to show Africa and the Middle East
IN 2019 TECHNOLOGIES TO PROCESS
catching up with the rest of the world in
$387 BILLION IN TRANSACTIONS
online shopping – even though their data Data released by the payments industry’s
suggests there’s still a long way to go. self-regulating body, the Australian Payments A new study has found that the value of
Network (AusPayNet) revealed a 19.5 percent transactions processed by smart checkout
decline in card fraud in 2019, the biggest technologies, where the fixed checkout
DOMESTIC SCHEMES MATTER:
decline since fraud data was first published. process is replaced by a frictionless model,
ACQUIRERS AND MERCHANTS
will reach $387 billion in 2025, up from just
SHOULD INCLUDE THEM.
24-25 ISSUING & $2 billion in 2020.
Amidst all the hype about new payments ACQUIRING
methods and channels, it’s easy to ignore 28 E-COMMERCE
smaller, single-market players – but to do
BIS REPORT: THE RISE OF
so would be a mistake. Domestic payment
CENTRAL BANK DIGITAL AMAZON UNWRAPS THE
schemes accounted for 12 percent of all
CURRENCIES (CBDC) FINANCIAL SERVICES MARKET
global payments last year – and they’re
adapting strongly for the digital environment. Central bank digital currencies (CBDC) If you said Amazon was trying to take a
are receiving more attention than ever foothold in the financial services and
before. Yet the motivations for issuance payments market, not many would be
QR CODES TO DRIVE GROWTH
vary across countries, as do the policy surprised. But many will be shocked to see
IN EMERGING MARKETS – AND
approaches and technical designs. just how deep that move has penetrated.
ELSEWHERE
A new report from the GSMA, NTT Data and
ANALYSIS OF UK CREDIT 29 PRODUCTS &
specialist payments consultancy Accourt
CARD DATA SHOWS UPLIFT IN CONTRACTS
argues that QR code payments are no
SPENDING AND PAYMENTS
longer a phenomenon confined to China,
AMERICAN EXPRESS COMPLETES
but are set for rapid growth globally – with New UK credit card issuer data has been
a particular focus on the world’s emerging released for June and July 2020. We
KABBAGE ACQUISITION
markets. present our analysis of UK credit card American Express says it has entered into
trends after COVID-19. an agreement to acquire substantially
4 PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020
FEATURES
all of Kabbage, a financial technology
company providing cash flow
management solutions to small
PAGE 12-14
businesses in the US.
EC APPROVES MASTERCARD
ACQUISITION OF NETS
SUBJECT TO CONDITIONS
The European Commission announced
it will approve the proposed acquisition
of Nets' account-to-account payment
business by Mastercard under EU Set...
acquisition regulations.
Go...
30 VIRTUAL & PHYSICAL
EVENTS Ready?
ATMINSEC ATM Security
Conference and Exhibition
20-21 October, Virtual
www.atminsec.com
Future Stores EU
21 October, Virtual PAGE 16-18
connectedstores.wbresearch.com/
Money2020 USA
25-28 October, Virtual
Us.money2020.com Investors and intermediaries are flocking to Latin America, lured by high growth
rates in everything from e-commerce to mobile wallets. But stubbornly high
Open Banking Expo Canada cash use, a low banked population and historical economic factors – not to
3-5 November, Virtual mention diverse economic development – all present challenges. PCM’s James
www.openbankingexpo.com/canada Wood gets ready to salsa…
Branch Transformation 2020
17-18 November, London PAGE 20-21
23-24 November Virtual
www.rbrlondon.com/conferences/bt/
COMING CLEAN:
ENBANTEC Retail Banking EMEA
18 November, Virtual
BETTER ACTION
www.enbantec.com
ON AML
AI in Payments and Fraud Risk
Management Asia Pacific The first half of 2020 saw fines for money
8 December, Virtual laundering almost double compared to 2019.
https://kinfos.events/aipsummi t So are much-hyped Artificial Intelligence
and Machine Learning techniques catching
ebintec more crime – and can regulation keep up with
9-10 December, Virtual criminal ingenuity? PCM learns all about dark
www.ebintec.com money – and how to fight it harder…
PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020 5
MARKET ANALYSIS
SMES ARE POORLY SERVED IN PAYMENTS - IT’S TIME FOR CHANGE
Recent research has revealed that SMEs of their success and failure affects us wide the gap really
are vital to Europe’s economy as the all. A simple solution here would be to is between how
world seeks to recover from the effects provide products more relevant to smaller well banks believe
of COVID-19. Despite their importance to companies, which would have the effect they service smaller
the overall economy, small firms have of creating a level playing field.” corporates, and what
suffered disproportionately during this A recent study from Banking Circle SMEs are actually
crisis – and they’re not happy with the shows just how unhappy most SMEs are getting, especially
service they’re getting from banks, with their banking services. Almost half when it comes to
acquirers and processors. It’s time to of the 1,500 SMEs they surveyed across relatively simple
lose the complacency and serve smaller Europe had looked outside their usual products such as
merchants better. bank to FinTech companies for services credit lines and
such as Foreign Exchange, with 85 percent money transfers.
Outside the large chain-stores, Europe’s of small companies saying they found New research from Xero, the small
merchants account for over 50 percent ForEx fees at their bank to be too high. business invoicing FinTech, says revenue
of the continent’s Gross Value Added Accessing credit from their banking for smaller firms is down 28 percent
(GVA) and two-thirds of all employment, partner was also a big issue for small across Europe since the start of COVID
according to the ECB. In the UK alone, and medium enterprises, with around a and employment down 6 percent: at this
the Xero/Accenture Small Business Index third of those surveyed saying that they difficult time, and with so much at stake,
(SBI) has shown SME employment fell by were looking for lower interest rates and banks must do more to focus on smaller
3 percent in Q3 2020. At the same time, a arrangement fees for their lines of credit. firms’ unique needs.
wide range of studies suggest SMEs feel In a separate report, Banking Circle
they are poorly served when it comes to interviewed banks from across Europe. The PCM SAYS:
money transfers, acquiring, and credit banks admitted they had struggled with
facilities provided by banks. the switch to a digital model. However, There’s a well-worn complaint from
According to Scott Donnelly, CEO of SME more than nine in ten still believed banks that it’s hard to make money out
specialist lending platform CapitalBox, they were well-equipped to serve their of SME relationships – but it can be done,
“Governments and banks generally favour customers digitally, and 90 percent especially at scale. China’s Ant Financial
larger companies, which gives big firms believed they used all available data in has created a platform which serves
a competitive advantage. In the end, the their development of new products and around half of that country’s SMEs
SME segment provides nearly as many services for their corporate customers. with a tailored product suite, including
jobs as larger companies and the impact Banking Circle’s research shows how transaction acquiring and processing,
loans, foreign exchange and lines of
credit. Ant’s platform on-boards SMEs in
Why do you feel you are not well served by your current banking partners? minutes, and approves them for specific
services just as quickly. Meanwhile,
Offshore call centre doesn’t understand my needs
new FinTechs from the US and Canada
like Wealthsimple show how to combine
Not easy to transact via smartphone digital delivery with personalised
services.
Don’t feel I am/my business is a priority for them
For too long, consultants and
Slow response times commentators have been warning
banks they must adapt, or risk being
Poor FX rates condemned to irrelevance. The time is
upon us when it will be too late, and tech
High fees
platforms will start winning business
Unable to access services I need from banks. In money transfer alone,
FinTechs have come from nowhere to
Poor quality, inconsistent service
capture 35 percent of the market in the
last decade. Unless banks do more to
Other
help smaller companies, it won’t be long
0% 10% 20% 30% 40% 50% 60% before other business lines, including
■ Nordics 2020 ■ NL 2020 ■ FR 2020 ■ DE 2020 ■ UK 2020 ■ ALL 2020 credit, processing and acquiring, go the
SOURCE: BANKING CIRCLE: MIND THE GAP same way.
6 PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020
MARKET ANALYSIS
E-COMMERCE IN AFRICA: PROMISE FULFILLED?
In our last issue, PCM’s lead feature have smartphones. Internet penetration is
examined the potential and risks also high, at 83 percent of the population
associated with African payments. Now compared to a regional average of 65
research from global payments firm PPRO percent. It will come as no surprise, then,
claims to show that Africa and the Middle that Kenya has one of the best records in We digitize
East catching up with the rest of the world sub-Saharan Africa on e-commerce, with
in online shopping – even though their data growth of 17 percent in e-commerce sales
cards and bring
suggests there’s still a long way to go. predicted for 2020. However, this is still a “Upgraded banking
paltry one percent of all retail sales, barely
experience”.
PPRO’s report says the e-commerce market a quarter of the regional average and one-
is now worth $79 billion across the Middle sixteenth of the world average. Again, South
Antelop provides secure
East and Africa, representing growth of Africa is highlighted as the best-performing
Authentication and
around a third over the past year. Within e-commerce market in sub-Saharan Africa,
Payments solutions with:
such a vast area, however, there are tipped to grow at 24 percent this year – but
significant disparities in the adoption of even then, e-commerce accounts for just
• Simplified Digital
online payments, caused by everything two percent of all retail sales.
Payments:
from massive income inequality to low bank The report’s authors caution that income
- Issuer Tokenization Hub
account penetration, poor internet access disparity can often be a better indicator of
and even patchy delivery systems. e-commerce growth than either internet
for Apple Pay/Google Pay/
Across the Middle East, e-commerce access or smartphone penetration, noting any Pay and ecommerce
accounts for five percent of all retail that (for example) the top 1 percent of tokens
purchases, almost five times the 1.1 percent earners in Saudi Arabia make 150 times - Token Manager: unified
seen in sub-Saharan Africa. Demonstrating more per year on average than the bottom way to push & control
the wide range of markets included in this 50 percent. This leads to the creation of digital cards from bank
study, Morocco saw less than one percent of a tiny elite whose e-commerce spend app. into any use case
sales via digital channels – whereas Saudi is significantly higher than any other (eg. Apple Pay…)
Arabia came closest to meeting the world population group – and high spending
- NFC issuer wallet
average, at 8.6 percent of all sales against a by that elite gives a “false positive” view
- Secure display of
global average of sixteen percent. of how e-commerce is progressing at a
sensitive card details from
national level.
bank app...
Regional Payment Trends Although PPRO note the welcome rise in
financial inclusion in Africa, pointing out
• PSD2 Strong Customer
Region World
Population 574 m 7.6 bn that 20 percent more Africans now hold Authentication (SCA) with
Population (15+) 375.9 m 5.6 bn
banking relationships compared to two unique security and latest
GDP 3.6 tr 85.8 tr
GDP per capita 6,191 11,299
years ago, they also acknowledge that the biometrics securing all
B2C e-commerce 78.9 bn 3.4 tr entire financial services market continues mobile banking use cases
(from credit transfers to
B2C e-commerce growth 30% 18%
to be hampered by poor access – whether
Online population 375.8 m 4.5 bn
Smartphone penetration 58% 58%
to traditional bank branches, or to digital 3DS ecommerce)
Mobile e-commerce 43% 50% services through the internet.
Average online spend 798 2,594
In summary, while there are lessons Antelop PCI DSS SaaS
E-commerce % of total retail 4% 16%
to be learned from PPRO’s round-up of platform and unified SDK
Currencies in this report are always depicted in $USD
e-commerce in the Middle East and Africa, are certified Mastercard
SOURCE: PPRO
the twin spectres of income disparity and MDES, Visa VTS and CB.
Such disparities may cause the impartial continuing financial exclusion for the poor Supported by large
reader to question the value of lumping this make it hard to draw convincing lessons international partners,
vast geographical region into one study. from their research, beyond the fact that Antelop serves >30 banks,
Nonetheless, there are some identifiable e-commerce volumes are growing fast from issuers and processors in
similarities, not least the relationship between a very low base and financial exclusion is more than 19 countries.
a healthy banked population and access to improving. That said, and using PPRO’s own
smartphones on the one hand, and rapid figures as a baseline, the region may have antelop-solutions.com
7
growth in e-commerce on the other. caught up with the rest of the world in the contact@antelop.fr
In Kenya, for instance, 56 percent of next five to seven years – provided that
the population is banked, and 43 percent growth continues on its current trajectory.
PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020 7
MARKET ANALYSIS
DOMESTIC SCHEMES MATTER: ACQUIRERS AND MERCHANTS SHOULD INCLUDE THEM
Amidst all the hype about new payments Typically, domestic schemes have an schemes are up for the fight against
methods and channels, it’s easy to ignore excellent understanding of their target international players – including big
smaller, single-market players – but to do customers, especially in countries with tech companies. More than half of the 38
so would be a mistake. Domestic payment significant unbanked populations. Overall, domestic payment schemes surveyed
schemes accounted for 12 percent of limited international functionality on in Choosing the Right Route: Domestic
all global payments last year – and domestic scheme-branded cards is not Schemes Innovation have hired an
they’re adapting strongly for the digital an issue as cardholders tend not to travel innovation department to combat the
environment. outside the country of issuance. Domestic threats posed by international payment
schemes also benefit from a wider schemes and meet consumer demands for
New research from RBR shows that several acceptance network than for international new services. Overall, two-thirds of those
big markets are seeing a rapid increase in schemes, as in Germany and Portugal. And surveyed are now investing in innovation
domestic scheme branded cards. India, when it comes to e-commerce, domestic either internally, or with external partners.
Russia and Brazil stand out in particular, schemes rule the roost. New (September Almost nine in ten of the domestic
with growth driven by schemes like RuPay, 2020) research from PPRO says domestic schemes surveyed are currently investing in
Mir and ELO. In Russia, the growth of Mir is schemes account for 77 percent of open APIs to enable connectivity to global
down to public sector workers receiving e-commerce spend; by 2024, they forecast payments, while 94 percent are planning
their salary payments through the scheme. that this share will increase to 82 percent. to expand beyond their card products to
Lower processing costs, both for issuers and Although domestic-only cards account create Real-Time Payments schemes (like
acquirers, further encourage the adoption for a relatively small segment of the Sweden’s SWISH) and, unsurprisingly, mobile
of domestic scheme-branded cards. This is payment card sector, they possess apps – such as that created by Brazil’s ELO
one of the reasons behind RuPay’s growth some unique advantages that ensure in 2018 in partnership with iPass.
in India, which makes up a quarter of all their continued relevance in the future. With six in ten domestic schemes
domestic scheme cards worldwide. In particular, schemes like Belgium’s now either offering a mobile app or well
In many countries, cards branded with a bancontact show how nimble, flexible and advanced in their move towards mobile,
domestic scheme are offered as an entry adaptable domestic schemes can be. domestic players are demonstrating how
product to the formerly unbanked alongside Bancontact launched payconiq, a mobile agile and flexible they can be. What’s more,
their first account. This is the case in Chile, payments app, in 2015, and has since their move towards open APIs shows they
where BancoEstado’s CuentaRUT debit expanded the scheme to Luxembourg and are ready for partnership – and with twelve
cards carry the branding of the Redcompra the Netherlands through partnerships with percent market share in a trillion-dollar
domestic scheme. Digicash and other local players. global payments market that’s expanding
at more than twenty percent each year,
Innovation begins at home acquirers and merchants would do well to
Distribution of domestic scheme- integrate these schemes into their payment
only cards worldwide in 2018 A recent study led by payments veteran offerings – especially since they are also
John Chaplin, formerly of Visa and First often cheaper to work with than the major
Data, shows the extent to which domestic tech players.
Russia
Taiwan3%
3% Others
Innovation Priorities for Domestic Schemes
8%
India 80
S. Korea
6% 26% 70
Jury score on 1 to 100 scale
60
Vietnam
6% 50
Brazil 40
9% Japan 30
Iran 22% 20
17% 10
0
Technology Developing Infrastructure/ International Commercial Responding Changing the
(chips specs, new services processing acceptance (cost reduction to regulatory governance
tokenization etc) or revenue requirements model
increase)
SOURCE: GLOBAL PAYMENT CARDS DATA
AND FORECASTS TO 2024 (RBR) SOURCE: THE PAYMENTS INNOVATION JURY
8 PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020
MARKET ANALYSIS
QR CODES TO DRIVE GROWTH IN EMERGING MARKETS – AND ELSEWHERE
A new report from the GSMA, NTT Data and expanding. For instance, one in five Chinese though, they demonstrate clear potential to
specialist payments consultancy Accourt consumers now transact using five or more galvanise digitisation and economic growth,
argues that QR code payments are no functions in their AliPay accounts – including especially in countries with large unbanked
longer a phenomenon confined to China, standard digital payment, QR code, populations and low infrastructure.
but are set for rapid growth globally – with investing, insurance and other functions. Thailand’s SmartPay has enabled QR
a particular focus on the world’s emerging code payments for everything from taxis
markets. QR codes: beyond China to street food vendors.
Since its launch in late
China is the poster-child for QR code While China is the oft-cited example, many 2018, SmartPay has
payment, with two-thirds of AliPay customers other global markets are making wider use acquired one million
using QR code payments alongside other of QR codes, including the US, the UK, Japan users, mainly in rural
options in 2019. As we’ll see, the development and South Korea. However, the highest areas with poor
of QR code payments needs to be viewed growth rates come in the “Rest of the World” access to traditional
in the context of the wider development of category, with markets like South Africa and banking services,
mobile wallet technologies. In their paper, Nigeria pegged for expansion of 24 percent and 60,000 merchants.
the GSMA and Accourt argue that QR code and 18 percent in QR code payments in the Consistent with the model envisaged
payments should be included as an option next year. Indeed, a quarter of Africa’s 54 by GSMA and Accourt, SmartPay is now
alongside a straightforward mobile wallet markets now have one or more QR code expanding its palette of services to include
payment, especially in emerging economies. payment schemes. insurance, money transfers and micro-credit
According to the report’s authors, for small businesses.
emerging markets may – with some
Mobile and Digital Commerce preconditions – represent fertile ground
Growth, 2017-2024 in which QR code payments can flourish. Consumer digital payments
For some time, mobile money providers Top five countries, volumes (f2020)
10
USD trillion
(MMPs) have supported the most basic
China 44%
financial services in these markets, including
mobile top-ups and person-to-person 1,921
8
(P2P) payments. Given the high unbanked United States 20%
populations in some developing markets (in 896
6 Yemen, for instance, only three percent of
Japan4%
the population have a bank account), P2P
services are sometimes the only means of 165
4 exchanging value conveniently. United Kingdom 4%
164
Cracking the code
South Korea 2%
2
That said, there are a number of challenges 114
for companies looking to introduce QR Rest of World 26%
0
code payments, including fragmented and 1,147
2017 2018 2019 f2020 f2021 f2022 f2023 f2024
Digital commerce Mobile POS payments
unreliable mobile internet connectivity and US$ billions
the high cost, relatively speaking, of smart
SOURCE: GSMA, NTT DATA AND ACCOURT phones that can easily handle rich QR codes. SOURCE: GSMA, NTT DATA AND ACCOURT
Some of these problems can be overcome
The shift to digital payments is now by using specific message formats linked to There’s no “one size fits all” approach to QR
firmly established, with the value of digital Unstructured Supplementary Service Data codes, say the authors, given the wide range
transactions set to reach $4.4 trillion by the (USSD), typically employed in environments of specs on offer and wide variations in
end of this year. As our graphic shows, mobile with slower data speeds and less powerful internet access. The chances of successfully
is taking an increasing share of overall digital phones – like emerging markets. However, launching a QR code payment scheme will
spending from computers – and within this, there are other challenges, including the be enhanced by ensuring interoperability
wallets are growing in popularity. wide range of QR code specifications with existing payment options (such as cards
While these facts may be widely accepted currently on offer, and anticipated tough and cash), and by embedding QR codes as
in the industry, it’s less well-appreciated that competition for a share of consumer wallets. an option alongside other payment methods
the functionality of mobile wallets is also Where such schemes are successful, in a digital wallet.
PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020 9
MARKET ANALYSIS
AFTER COVID-19: LIFE, BUT NOT AS WE KNOW IT…
Three months ago, PCM brought you the and intermediaries must strengthen their buy or partner – it’s too late to develop a
world’s first in-depth analysis of how the fraud detection processes, including the credible digital offering from scratch. And
payments market has been affected by use of dynamic fraud detection techniques, this digital offering must include genuinely
COVID-19. Now we offer fresh thinking on and new verification technologies such as digital services, rather than a cute Graphical
life in payments after COVID-19 and what independent device verification (IDV) for the User Interface (GUI) that leads to vanilla
happens next... mobile channel. services found in the physical world. Both
• Demand for digital currencies will grow – in retail and corporate banking, customers
How things have changed in June 2020, Benoît Cœuré of the Bank for are looking for more tailored and cheaper
International Settlements said, “COVID-19 services – and it looks like partnership is now
First, a summary of how the market has will be remembered by economic historians the only way the slower players in the market
shifted. Some vertical sectors (such as as the event that pushed Central Bank are going to achieve this.
travel) have virtually ceased activity, with Digital Currency (CBDC) development into • Physical and digital payments will blur
volumes down by 90 percent. Meanwhile top gear.” Even given its notorious volatility, as merchants get ready. For years now,
others have risen sharply, such as food Bitcoin (BTC) has doubled in value since the the concept of omnichannel commerce
delivery (up 30 percent). Eric Solis, CEO of start of the crisis – and the growth in mobile has been bandied around the industry.
MOVO Cash, estimates that fraud attacks wallets, plus the move away from physical Some have said it’s impossible, others that
have increased by more than 200 percent, cash, has given impetus to central bank it’s coming next year. COVID-19 has made
with new vertical sectors like food delivery interest in the management and regulation omnichannel a reality by necessity: if you
being hardest hit, as their defences were of digital currencies. In May 2020, BCG said feel uneasy touching a keypad, you’ll order
weaker. that at least twenty governments world-wide an item online that you’ve just seen in a
At the same time, contactless and digital were known to have launched either test or store. The implications of this shift are huge,
wallet transactions have soared at the pilot digital currencies. and cover everything from the design of
expense of cash and, to a lesser extent, • Partnerships are a matter of survival – as retail environments through to the need for
cards. By any measure, e-commerce has we have long argued at PCM, in common a faster, better checkout experience. For
been the biggest winner, with volumes with many leading consultancies, time merchants, permitting more ways to pay
growing by as much as 300 percent in is running out for established financial will be an important step – as will making
popular categories such as online grocery. A institutions that have not yet fully embraced sure that your online platform matches your
calmer assessment of how far e-commerce the digital era. At this late stage, the only physical store, and that online and remote
has come during the pandemic comes from realistic ways to give customers the online payments are as friction-free, simple and
visitor numbers to major vendor websites, experience they are looking for is either to secure as possible.
which are up 125 percent globally over the
last six months.
Digital payments rise after COVID
What happens next
Estimated pecentage of Digital Spurs to increased adoption for
As a recent client note from management
transaction values done payment
consultants Oliver Wyman puts it, “we have
digitally in 2025 increases for... Consumers Merchants
seen five years of change happen in the
last few months.” With the landscape so 5 to 10 percentage point increase
... Physical
radically shifted, it can be hard to identify stores will rise Shift in
Increase in
behavior
4 to 8
what’s coming next. We offer the following acceptance for
toward digital
suggestions based on our discussions with digital payment
points
payment
industry leaders:
• The industry must improve KYC and
fraud detection systems – onboarding 57% 67% ... E-commerce Increase in new
customers digitally has switched from being will rise e-commerce More retailers
optional to essential for banks and retailers. users plus adopting online
But digital onboarding brings with it huge 1 to 2 higher average or omnichannel
points
spending of approach
increases in fraud risk, especially from Estimate before Estimate after
existing users
Covid-19 Covid-19
user impersonation and particularly in the
mobile channel. Some estimates suggest Note: Digital payment methods include contactless, online, or through apps or wearable devices
that half of attempted online account
openings are fraudulent. Merchants, banks SOURCE: BAIN AND COMPANY
10 PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020THOUGHT LEADERSHIP
QR CODES:
THE DIGITAL REVOLUTION’S
NEXT STAGE
We caught up with Li Yan, CEO and Co-founder
of Wiseasy, to find out how QR codes have
moved from information transfer to become
the world’s fastest-growing way to pay.
Wiseasy is a leading player in digital Chinese payments by 2022. It’s the same in popularity. They are cheap and easy to
banking hardware. Please explain the story in Latin America: right now, there are install and run, and payment is confirmed in
relationship between digital banking 3.5 million users of QR codes for payments, real time via both the merchant’s device and
and QR codes for payment? and the GSMA just told us that will grow the consumer’s smartphone.
by 36% per year out to 2024. The amazing
Li Yan (LY): The use of mobile wallets is well- thing about QR codes is their flexibility – you Fraud is rising fast in the digital
established in Asia and growing rapidly can select goods from a list or menu, order channel, especially in markets
in popularity across the world. As mobile and pay – all via QR code. In Asia, this has that don’t have comprehensive
wallets proliferate, we’ll see growth in digital led to QR codes being the basis of “super digital ID systems. As QR codes rise
bank branches – remote terminals that allow Apps” that let you do everything from food in popularity, how do we ensure
consumers to do everything from manage shopping to investing – all in one channel, security?
investments to paying utility bills. Meanwhile, and all via QR code.
digital wallet functionality is going to LY: We have seen some issues in China where
increase beyond banking to include mobile “The amazing thing about QR merchants rely solely on static QR code
top-up, billing, invoicing and ATM functions codes is their flexibility – you images which can be faked. That said, QR
like cash withdrawal and deposit. The QR can select goods from a list or code payments are more secure than card
code is fundamental to all these functions menu, order and pay – all via payments in China: the answer to fraud risk
as well as being an easy, secure way to pay. QR code.” is either to adopt a fully-secure smart POS
That’s why we’re seeing such rapid growth in terminal (for larger merchants), or to use
QR code usage world-wide. They’re good for In hardware terms, what needs a speaker device for mutual transaction
payments – and many other things besides. to happen to enable QR code confirmation, like our “Wise Message” cloud-
acceptance and usage? based transaction confirmation system. Wise
QR codes are well-established in Message allows for real-time confirmation
Asia, but what about North America LY: From a hardware perspective, there of money transfer for both merchant and
and Europe? How do you see growth are two distinct trends. The first comes in consumer via a secure cloud link. The system
happening in these markets, where larger merchants and chain stores, where can work with both static and dynamic QR
bank cards currently dominate? we expect smart POS devices to proliferate codes. Best of all, transaction confirmation
that can handle cards, cash, digital wallets can be routed via a speaker (like the Wiseling
LY: The growth you’re referring to is already and QR codes. Our WPOS-QT product is one Sound Box) to reduce manual engagement
here. At present, around 6% of all payments example of this kind of terminal. In the SME and speed up transactions.
in North America use digital wallets. By and micro-merchant segment we are going
2022, we estimate this will be 10%. In Europe, to see super-cheap devices costing around To find out more about Wiseasy’s
the same figure is 9.4%, with around 15% of US$25 that permit street vendors and food range of digital banking solutions
payments by wallet in two years’ time. If stalls to accept QR codes, including “soft” and why QR codes are the future of
you look at Asia, QR codes became more POS systems on a merchant’s smartphone. payments, please visit:
popular for payment as wallets proliferated. Over the last five years in China, these
QR codes will be used in around 45% of all devices have surpassed card payments www.wiseasy.com
PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020 11Set...
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Ready?
BY JAMES WOOD, PCM MANAGING EDITOR
We’re now less than 90 days away from Brexit without much sign of a comprehensive trade deal.
We look at what this means for payments in the short to medium term, from passporting rights to
staffing, interchange rates and digital ID.
Depending on your thinking, Brexit could and Europe is no longer a given. While the considered as complying. Not addressing
be anything from a deluded attempt UK’s Financial Conduct Authority (FCA) this qualitative dimension means operating
to recover Britain’s nineteenth century has instituted a Temporary Permissions as (half-) empty shells – something we will
glories through to escaping from a debt- Regime (TPR) enabling registered European not accept. The ECB’s expectation is very
ridden, sclerotic trading bloc-cum- payments firms to continue operating in clear: all activities related to European
superstate. While such lofty debates the UK without relicensing through 2024, products or European customers should …
don’t concern us here, Britain’s decision the European Central Bank (ECB) has been be managed and controlled … in the EU.”
to leave the EU generates significant risks more robust. The ECB is demanding that UK This divergence has had several effects,
for payments, from doing business with entities looking to access Europe must be some of which – as always – may not
European markets to staffing, interchange licensed in the EU. Based on that license, have been anticipated. The first has seen
fees and the future implementation of they must acquire “passports” for all UK payments companies setting up EU
Open Banking and digital ID. markets in which they operate. subsidiaries to comply with the ECB’s
The ECB has recently doubled down expectations, including CEOs/Managing
Passporting blues on this approach, clarifying that “failure Directors and senior risk and operations
to hire staff with sufficient seniority and personnel. If this step hasn’t been taken,
At its most basic level, Brexit means that skills, [and] neglecting to make necessary now is the time to act. As Kriya Patel, CEO
the right to do business between the UK transfers of material assets … will not be of Transact Payments Limited, notes:
12 PAYMENTS
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“The additional headcount passporting for a business within three
The UK payments business and and paperwork required by months, while other European jurisdictions
the EU those in the payments sector can take up to three times as long. Such
a dynamic approach has led to the
to keep operating as they are
Baltic state rapidly becoming a hub for
today can prove to be a real
international firms looking to do business
177 electronic headache.” – Brad Hyett, in Europe, with 33 payments firms and
money institutions
CEO, Phos 47 electronic money institutions (EMIs)
(EMIs)
48%
locating there compared to a total of just
387 payment The unintended 10 firms in France and 15 in Malta. When it
of EU total institutions consequences of law comes to business start-ups and business
38%
continuity, much debate has focused on
If some predicted the extra paperwork outcomes for the UK. While this is laudable,
70 Account of EU total and cost, then Brexit has had other evidence to date suggests that outcomes
Information consequences few could have anticipated. for European markets will be mixed,
providers (AISP) The received wisdom from HM Treasury depending on their level of regulatory
68%
pre-referendum ran that Brexit would lead flexibility.
54 Payment to the relocation of 100,000 financial jobs
of EU total Initiation Service to the EU within a year after leaving. In fact, Can’t get the staff these
Providers (PISP) evidence cited by The Daily Telegraph days?
39% and others suggests less than 10,000 jobs
lost from a sector employing more than 1.1
of EU total
million people, or less than 0.01 percent of
all financial services employment.
SOURCE: UK FINANCIAL CONDUCT AUTHORITY Indeed, a study in UK trade journal The
Actuary from January 2020 showed that UK Fintechs employ
“Payments companies must take action on
this now, if they haven’t done so already.
more than 1,000 European firms have
opened new offices in the UK, helping to
four times
more non-UK
We can expect regulators to be inundated offset the job losses in the other direction.
staff than British
with passporting requests, and approvals More recent data from digital clearing
nationals
can take up to 90 days to approve these bank ClearBank puts this number at
requests given the traffic required between 1,400 European companies. With London
Two-thirds
regulators.” still accounting for more liquidity than
of these employees
come from outside
37%
Patel also notes UK companies should Paris, Frankfurt and other European hubs
not believe passporting requirements combined, it seems as if the UK has the EU
are as uniform or harmonised as some retained its attractiveness as a place to do
of UK FinTechs
would assume. For those offering payment business – for now.
struggle to recruit
services through European bank accounts A second unforeseen consequence is
the right talent
in particular, otherwise known as Account- some of the larger UK banks and payments
outside London
Initiated Service Providers (AISPs) there can firms that have chosen to withdraw from
be different standards for connecting to lower-volume European markets. In a
accounts across the European landscape. move that could affect up to 13,000 Britons
There’s no question that this has been living in Europe, Lloyds Bank confirmed it
SOURCE: UK FINANCIAL CONDUCT AUTHORITY
a challenge for many firms, especially will withdraw current accounts for British
as they cope with the fallout from the customers living in Holland, Slovakia,
COVID-19 pandemic. As Brad Hyett, CEO Germany, Ireland, Italy and Portugal – but As the Brexit story continues, it’s possible
of next-generation POS firm phos, says: retain them for France and Spain, where that London and South-east England could
“the additional headcount and paperwork significant concentrations of customers find itself the victim of its own success.
required by those in payments to keep live. It’s possible that UK-based payments According to data from E&Y, UK FinTechs
operating exactly as they are today can services providers could be forced to make employ four times more non-UK staff
prove to be a real headache - and a similar decisions considering the wide than nationals, two-thirds of whom come
no-deal will only exacerbate this. However, range of passporting expectations on the from outside the EU. While applications for
if companies manage to take control part of European markets. “settled status” for existing workers are still
of these changes then the longer-term At one end of the scale, Lithuania being accepted by the UK government, this
impacts should be minimal.” promises to deliver full licensing and will change from 1 January 2021.
PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020 13BREXIT
From January 2021, those applying to Council has approved the UK’s continued digital transaction security to be beefed
work in the UK will have to gain 70 points participation in the Single European Payment up with two forms of authentication. The
to be eligible for a visa. They must also Area (SEPA) payment schemes even in a implementation of SCA has been dogged
have an existing job offer worth more than no-deal scenario. Under SEPA rules, where by slow compliance on the part of major
£25,600 and speak English to a certain level a credit transfer or direct debit involves a banks and retailers, and has been kicked
to qualify for their visa. While it may be third country participant, the full name and into the long grass with compliance
argued these new rules are less onerous address of the payer must be included in extensions deep into 2021.
than immigration to (say) the United States, the relevant payment instruction. The SEPA In the short term, there’s little reason for
there is some hard and much anecdotal rules apply only to credit transfers and the UK to seek to diverge from European
evidence that such restrictions are causing direct debits denominated in euro - not standards relating to transaction security
concern. card payments. From next year, UK payment or digital ID, especially since similar
For instance, E&Y report that 37 percent service providers (PSPs) will have to provide standards are now being adopted in Latin
of UK fintechs now struggle to recruit the additional information like payer name and America, Canada and other markets.
right quality of staff if they are not based in address for credit transfers and direct debits Longer term, the UK may decide that
South-East England. If the UK government is in euro between the UK and the EEA/EU. its status as a leader in Open Banking
serious about rebooting the entire nation’s will allow it to alter security standards,
economy, they will have to address this Open Banking, PSD2 and especially if biometrics like face, voice and
issue. And staffing has already become digital ID fingerprint recognition fulfil their potential.
a problem for some UK-based FinTechs Finally, another possible area of
focused on payments, as Sophie Guibaud, Adherence to the second Payment Services divergence from European standards
Chief Growth Officer at open payments Directive (PSD2), promulgated by the EU post-Brexit lies in the area of interchange
FinTech OpenPayd, notes: “We’re already in 2018, and European digital ID standards on card-initiated transactions and digital
finding that it’s tougher to get people are interesting areas for the UK given its wallets linked to cards. The EU’s firm line
to come to the UK now. There’s a lot of status as a global leader in open banking with the major card networks and banks
competition in the FinTech space, and not and digital payments. The issue here is the on interchange is well-known and caps
enough talent.” extent to which the UK decides to continue interchange at 0.3 percent for credit cards
with European legislation after Brexit, or and 0.2 percent for debit cards. Currently,
diverge. In this regard, Iceland provides a the plan is to “onshore” interchange
“It’s already tougher to get
possible role model: although not part of legislation into UK law from 1 January 2021 –
people to come to the UK –
the EU, it has fully adopted the provisions but only for UK transactions using UK cards.
there’s lots of competition of PSD2 and eIDAS to enable its financial This opens up the possibility of divergence
in FinTech, and not enough services companies to continue to do for cross-border card transactions
talent.” – Sophie Guibaud, business across the continent. between the UK and EU, a possible boon for
OpenPayd. One important provision of PSD2 banks and e-wallet companies – but not so
is its mandate for Strong Customer much for consumers. Whether these firms
Authentication (SCA) in all digital decide to take this step remains to be seen
Certain uncertainties transactions. In essence, SCA requires – like so much else about Brexit.
There’s no doubt that Brexit has caused some
companies extra administrative burdens
and costs – and that the situation regarding BREXIT Passporting and licensing
hiring talent might most diplomatically be
described as fluid. James Dillon, Senior Bank
CHECKLIST If you haven’t applied for an EU license, do so now
Check your old scheme memberships, as these may no
Relationship Manager at Clearbank, says that longer be valid
while most big firms have already settled Staffing
their licensing and passporting positions,
If you’re UK-based, apply for “settled status” for EU
matters are not so simple for smaller
nationals now
companies: “There’s an unfortunate political Check to see how your hiring plans could be affected
stand-off and tense negotiations happening. next year with the new UK regime.
These have left smaller companies on the
Regulation
outside, having to prepare for an uncertain
PCM will continue to monitor and update readers
environment and adding further regulatory
on alterations to the existing regime for digital ID, open
controls and costs.”
banking and UK/EU interchange arrangements.
Inside all this uncertainty, there are at
least some knowns. The European Payments
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WWW.SEAMLESS-EXPO.COM/MEBY JAMES WOOD, PCM MANAGING EDITOR
Investors and intermediaries are flocking to Latin America, lured by high growth rates in everything
from e-commerce to mobile wallets. But stubbornly high cash use, a low banked population
and historical economic factors – not to mention diverse economic development – all present
challenges. PCM’s James Wood gets ready to salsa…
In many ways, Latin America’s payments military dictatorships. Back then, economic in Latin America generated payments volume
business mirrors its languages: you can turmoil dampened consumer confidence in of $430 billion. This isn’t great compared to
travel from Tijuana to Tierra del Fuego and banking and the value of money, leading to the US, where the credit card market alone
get by in Spanish or Portuguese. But as cash hoarding and investment in specie or is a trillion dollar business and there’s more
anyone who’s spent any time there knows, offshore accounts. than 1.65 credit cards per person, according
every country – and even each locality – Another unfortunate consequence of this to ValuePenguin. With statistics like these, it’s
has its own dialect, sometimes so different economic disarray was the development easy to see why analysts and investors see
as to be barely comprehensible to an of a massive informal economy and an potential for growth in the Latin American
outsider. increase in the cost of financial services payments business.
for users. These factors have combined to
To put it bluntly, localisation is everything deliver a surprisingly low banked population, An instalment of good news
in Latin America. It’s easy to give a 50-word with major markets like Brazil still having
precis of the payments market: cash is 45 million citizens unbanked, or 25 percent So much for the fundamental challenges.
still king, e-commerce is rising (linked to of the population. Across Latin America, a On the brighter side, COVID-19 has propelled
cash, not cards) and new technologies are high unbanked population and low card Latin American consumers towards
on the rise – but fraud is a huge problem. penetration have hampered the growth of electronic payments, with two-thirds saying
However, such a blanket summary misses electronic payments – according to FindEx, they want to reduce their usage of cash as a
the heart of this region – which is that the banked population stood at an average result of the pandemic. And there’s at least
most opportunities for international firms of 55 percent, with markets like Peru still one area in which Latin American markets
will come through partnerships and the around 40 percent. have been leaders and innovators since the
localisation of international systems. And 1970s – instalment payments. If instalment
given the vast rates of growth currently payments are the latest consumer trend
“a high unbanked population
being experienced, those opportunities – as in Western Europe, then they’ve long been
and low card penetration have
we’ll see – are significant. preferred in Latin America, thanks mainly to
Alongside Africa, Latin America is the last
hampered growth across Latin the hyperinflation and uncertainty referred
region in which consumers still use cash far America” to earlier.
more than cards. 85 percent of transactions Instalment payments are long-
across the region are conducted using Card penetration isn’t much better, with just established in Latin America, with 77
cash – rising as high as 90 percent in 12 percent of citizens holding a credit card in percent of Argentinians and 80 percent of
Mexico. There are a number of historical 2019, and 13 percent in Brazil. Indeed, there are Brazilians preferring them for all purchases,
and cultural reasons for this: cash use is only 113 million credit cards across the region especially (see graph above) for payments
linked to bouts of hyperinflation in the 1970s for a population of 650 million, and 365 million over $50. They are as common as credit
and 80s as the region exited a period of debit cards. Together, credit and debit cards card payments in America or debit cards
16 PAYMENTS
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In another twist, the reliance on recently hit 15 million users, making it one of
Preference for Instalment Payments cash hasn’t stopped fraud attempts in the largest neobanks in the world.
in Brazil e-commerce. If anything, the situation Neobanks make sense in Latin America
is getting worse – Latin Americans because they don’t rely on branch networks
Up to USD 7.50 experienced an 88 percent rise in (which can be very sparse in rural areas)
11% 89% e-commerce fraud between 2018 and 2019, and enable the region’s massive SME and
with fraud rates in e-commerce ten times micro-merchant segment to engage with
USD 7.50 - USD 15
higher than in other areas of financial electronic and online commerce. According
16% 84% services. More than half of Mexicans and to Dun & Bradstreet Research, 99 percent
nearly as many Brazilians have been the of all commercial activity in Latin America
USD 15 - USD 25
victim of online fraud – much higher than comes from SMEs – and digital banking is
37% 63% the global average of around one-third the smart – often the only – choice for
of citizens. such companies.
USD 25 - USD 50
The problem seems to be there’s such a
65% 35% wide range of schemes and standards that “99 percent of businesses in
introducing effective protocols is nigh-on
USD 50 - USD 75 LatAm are SMEs – and digital
impossible. For all that, e-commerce in
79% 21%
banking is often their only
Latin America is growing at a faster clip (23
percent) than the global rate of 15 percent,
option.”
Installments Single up-front according to Aron Schwarzkopf of Kushki, a
payment Latin American PSP. Schwarzkopf claims that Regulation: not easy, but
Latin American digital commerce is among necessary
SOURCE: EBANX
the most vibrant in the world, with mobile
in Europe, and stem from the 1980s, when set to account for a quarter of all online Regulators in many Latin American markets
consumers would use instalments as a business by 2022. are taking notice of these moves. But
hedge against massive inflation. regulating such a diverse set of economies
Open for innovation? – especially with the huge informal
Digital awakening economy and large percentage of SMEs –
Rapid growth in online payments, an isn’t easy. In 2018, Mexico passed the FinTech
Latin America’s love of paying with cash and even faster rise in fraud – what’s next? law, which effectively provided equivalence
instalments helps to explain the strange The rise in mobile commerce referred with Europe’s PSD2 and enabled Open
make-up of its digital commerce market, in to above provides a clue: banking and Banking. In 2020, the country updated this
which cash (on delivery and on account) is financial services are moving to online law to allow connections between FinTechs
used to pay for the overwhelming majority platforms, spurred by the huge popularity and established banks via Open APIs.
of online purchases. To Western eyes, it will of smartphones. Cross-border payments Likewise, Brazil has also learned lessons
seem strange that the latest smartphones specialists Ebanx say that 86 percent of from the European and Australian
should be used to pay with cash – yet that’s Latin Americans will have a smartphone experiences of introducing Open Banking,
the essence of Latin America’s unique by the end of 2022, up from just 10 percent and will begin the journey to Open Banking
payments culture. a decade ago. In markets like Chile, 85 by enacting a first phase of legislation in
This unique culture also expresses itself percent of all internet access happens November 2020 – again to mandate open
in the cash storage systems used for online through the mobile network – driven in APIs between FinTechs and established
payment, which are almost exclusively part by the poor availability of at-home banks. This legislation will be followed by
local. Systems like Brazil’s Boleto Bancario, broadband. a second phase in May 2021 that will force
Argentina’s Rapipago and Mexico’s OXXO Given the low banked population, high banks to share their customer data – as
dominate online payments. In Mexico’s costs of traditional financial services and with Mexico, these legislative moves will put
case, local cash wallets account for 99 over-reliance on cash, it’s no surprise the Brazilian market on level pegging with
percent of online shopping, once OXXO, that digital-only banks, or neo-banks, are the EU, UK and other major players in Open
OpenPay and Connekta are included. As emerging rapidly in Latin America. Backed Banking. According to Sergio Biagini, Head
Ryan Frere, EVP Payments at Flywire, puts by the largest Series A round of funding of Financial Services at Deloitte Brazil, “In a
it: “international payments firms looking for a Spanish fintech, neobank Bnext country like Brazil, where marketplaces are
to enter the Latin American market should plans to launch in Latin America, starting growing and new business models towards
know that payments need to be local in Mexico where it has 170,000 users on a ecosystems are arising, Open Banking is
– these markets are all about building waiting list. Nubank, the largest neobank in a regulatory framework that stimulates
rails and working with local partners and Latin America, started in Brazil and is now competition, new entrants and new
acquirers for success.” operating in Argentina and Mexico. Nubank business models.”
PAYMENTS CARDS & MOBILE MAGAZINE - SEPTEMBER / OCTOBER 2020 17You can also read
