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In Argentina, the corona virus accelerates the implementation of virtual wallets

May 1, 2020

Since the beginning of the pandemic, alternative methods of cash have been introduced worldwide. Countries like China restricted the use of cash when infected by the virus, including the ability to burn a number of banknotes to prevent the virus from spreading.

Such extreme measures were not taken into account in Argentina, but the initial conditions of the pandemic severely threatened cash in circulation in the South American country. This triggered a certain level of uncertainty among the population and ultimately led to a boost for the fintech companies in the country.

The use of cash began to put public health at risk, and use had to be restricted to avoid contagion collapse. Long lines at ATMs and affiliates have been a constant. This situation was counterproductive to the social and mandatory isolation that the President of the Nation had ordered.

In Argentina, the corona virus accelerates the implementation of virtual walletsIn Argentina, the corona virus accelerates the implementation of virtual wallets

The immediate result was that the central bank intervened by a joint decision and approved the free withdrawal of interbank cash. This created the gap that fintech financial companies needed to take the initiative. Virtual or digital wallets on various platforms were advertised on social media, social media and print media.

With the initiative, virtual wallets have increased the percentage, but not at the desired speed. A report from the Andean Development Corporation shows that Argentina is in eighth place with 0.87% in terms of the use of fintechbelow the average of 1.16%, who are on the podium in Chile by 2.98%, in Peru by 2.46% and in Colombia by 2.36%. In the OECD countries, this value is 5.05 percent.

Contrary to expectations, the increase in the use of digital financial services has not increased enough as expected. This is also due to the fact that, according to the Central Bank of the Argentine Republic, at least 45% of Argentines are without bank details.

This leads to a global ignorance of the use of financial technology tools in the country. The government’s announcement to pay the Family Emergency Income (IFE) was an opportunity to further advance the use of disruptive financial technologies. Social assistance to alleviate the pandemic, which would benefit at least eight million people and would be paid under the additional modality of CVU (Unique Virtual Account).

This is a financial service offered by digital platforms using blockchain-based technologies such as Uala, Buenbit, etc. Surprisingly 2 days before the start of the grant, This decision was changed and they opted again for Orthodox payment systems.

Despite the fact that fintech was not taken into account on this occasion, digital solutions are still the order of the day. Virtual wallets like Mercadopago or Todopago make it possible to mobilize money freely and at low cost via their platforms.

From cash withdrawals from ATMs to investments in mutual funds from non-home platforms are some of the features that virtual wallets offer.

Since the beginning of the pandemic, everyone’s lifestyle has changed, including payment for purchases. You are no longer limited to a bank transfer, but the payment methods have to evolve.

Contactless solutions (payments without contact), payments with QR and CVUs are the development pillars for fintech and banks in the country. Banco Galicia, for example, in collaboration with MasterCard together with the manufacturer of smartwatches Garmin, whose teams can rely directly on a device to perform an operation by simply stretching the arm, which makes the experience almost smooth.

The secret lies in the use of NFC technology (which is used, for example, in the SUBE app to load the card), with which payments can be made without the use of plastic.

BBVA launched a payment service in March last year that is also based on NFC technologyWith the “GO” service, it was the first bank in the country to enable its Mastercard BBVA credit card customers to pay with their mobile phone.

It is also a more than interesting alternative to the popular QR because it is faster to process, although the QR technology (printed code) offers the advantage of a simpler but more secure implementation thanks to the blockchain. .

Next developments

BBVA is aware that payments with NFC technology have gained a large market thanks to the services of Apple Pay, Google Pay and Samsung Pay, especially in the United States and Europe.

They understand that the struggle for wages is not an easy task. A country that Mercadolibre has invaded with its payment and investment gateway that allows the user to pay QR codes and cards associated with the account is an innovation challenge. For this reason, the introduction of this technology can delay the use of virtual wallets somewhat in order to continue to use traditional banking services with strong innovations.

A fact that stands out from the bank is that no payment coupon needs to be signed for transactions over NFC of less than $ 2,000. In addition, the digital version of the card or the cards stored in the system is encrypted by a token, which offers the user an additional level of security.

It is estimated that around 500,000 facilities have the technology to accept NFC payments, but many don’t know it, or what’s worse, they don’t know how to use it.

In times of the pandemic, the solution was not just banking, but the opposite. Offering increasingly secure and digital ways to mobilize money for users every day has allowed banks to evolve in their system. In Argentina, bank transfers can take at least five minutes and take all day. Transfers between CVUs are instant accreditation, which means technology that is more for users.

In short, the fintech sector in Argentina was in constant motion, the Covid-19 gave the sector an abrupt impetus, and daily financial solutions don’t wait, cryptocurrency solutions are also in order of the day.

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