In 2020, virtual wallets accounted for a total of around 6.5 million users and in December 2022 in Argentina there were more than 330 fintech companies, according to estimates by the Argentine Fintech Chamber, of which 132 were digital payments (wallets , aggregators, gateways, remittance).
“Particularly in the country, certain regulatory relaxations and the predisposition to let things be done, added to the quality of available human resources and Argentine entrepreneurship, have led to many ideas taking to the field in the last decade. The result is this large number of ideas turned into companies”, comments Cristian Bertone, partner of BRS – Financial Services of Grant Thornton Argentina and main benchmark of the fintech industry.
This led the Central Bank of the Argentine Republic (BCRA) to implement the “Transfers 3.0” system. This program aims to boost digital payments, promoting greater financial inclusion in the country.
The project is based on the interoperability of QR codes for payment. This means that any virtual wallet or banking application can read any QR code to make transfer payments. Thus, these payments can be made both from bank accounts with CBU, as well as from virtual wallets with CVU.
A key for this open and universal ecosystem implemented by the BCRA to work is that all companies must have their credentials integrated to allow full interoperability of QR codes.
“The implementation of the interoperable system is an ambitious project and we are still in the early stages. For the functionalities that are already implemented, the challenges have more to do with operational issues than commercial ones. And in the current macro context, strategic decisions are more defensive and not expansive. As a concept it's very good for the user, but the participants are many and diverse, with different interests and priorities.
In the medium and long term, banks and fintechs should seek cooperation and synergy environments, each one has its strengths and it would be a mistake for them to compete to replace each other. In some aspects this is already happening, and with good results for both and for the user”, adds Bertone.
In order to establish the rules of interoperability, messaging and procedures for the exchange of information relevant to the entire financial system, this interface allows immediacy of payment, competitiveness and savings by providers. It also proposes flexibility, since it operates cards, as well as QR codes, payment requests and payments through ID or biometrics.
This last point requires specific cybersecurity measures to protect the private data of users.
“A phenomenon that was observed during the COVID-19 pandemic was the exponential growth in the use of electronic channels for all kinds of operations, hand in hand with this, cyber attacks also grew,” Cristian affirms. And he adds that "although, in my opinion, a low-regulation environment is ideal for the development of innovative projects, in this matter it is crucial that there are minimum security standards for threat assessment, implementation of prevention schemes and detection of threats, attacks and continuity management. Because in addition to the legal and economic impacts they may have, they threaten trust in the ecosystem as a whole and require the commitment and professionalism of all members: Banks, Fintech, Administrators and Regulators”.
“The future that we imagine for the sector can only be growth. Of course, many projects will fail along the way, but the industry will continue converting demands into new services, consolidating, refining and raising the standard”, comments Cristian.
However, virtual wallets suffered a severe blow with the latest Central Bank regulations that prevent their deposits from receiving income and depository banks, with 100% reserve requirements. “Under this scenario, the income possibilities are restricted almost exclusively to commissions for payments, management and collections. If this scenario holds, many wallets will probably have to mutate into other types of businesses. Let's hope that the restrictions are relaxed", reflects Bertone.