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The street vendor on the beach who accepts payments with credit and debit cards could no longer be a rarity in the country or an almost exclusive postcard of Brazilian or Uruguayan beach resorts. At least three of the largest private banks in Argentina are preparing the launch of a new form of payment via cell phone with its sights set on micro and small businesses, self-employed and monotributistas, such as independent professionals and home service providers, among others.
It’s all about the technology tap to phone that, by downloading an app on the mobile, works as a lower cost alternative to electronic payment terminals or posnet (as they are known generically in the country, even though they are a brand) and therefore avoids investing in those devices. It is also an option for smaller poss that attach to the cell phone since the phone is used directly.
The entities in question that work on the issue are Galicia (through its Nave trading platform), Macro and Santander (through its Getnet collections and services platform).according to what La Nación learned from sources familiar with the initiatives. The fintech world is no stranger to this business: Naranja X is already offering this product through an app called Cobro Tap and there are other fintechs about to launch similar products. This system could expand the acceptance of contactless credit and debit cards or payments with QR codes. It is already working in countries in the region such as Brazil, Colombia and Uruguay, where Visa introduced it 20 days ago.
The system works like this: whoever wants to make a charge must register through an app and then enter the amount to be charged, choose the “Cell phone charge” option and ask the customer to bring a debit or credit card to the back of the mobile phone. The application will charge immediately and provide the option to send the customer proof of payment by email or text message. Businesses will pay a commission on sales.
The cell phone needs to have NFC technology (Near Field Communication) that allows information to be exchanged without contact. It is presented as faster and more secure than others because the card data is not exposed at any time, which reduces fraud.
However, the sector is realistic and does not fool itself: They know that for this technology to take off in the country, the use of cards must first take place, which is hindered by tax issues and the high degree of informality in the Argentine economy.
According to the data they handle, only 30% of the total transactional goods and services are paid for with cards, when in other countries in the region this percentage is 50% (Chile) or 60% (Brazil). In the developed world it can even reach 90%, as in the case of the Nordic countries.
A source from the financial sector describes the tax burden that causes many businesses to not accept cards or give discounts for cash payments. “The average fee charged by the card to the merchant is 1% in debit and 1.8% in credit, which with taxes goes to 7% in debit and 9.5% in credit,” he explains. “And although the Base Law that is about to come out of Congress provides for the elimination of VAT and Profits in that commission (which reduces it by four percentage points) there is a part of Gross Income whose validity or elimination will depend on the will of the provinces, which are recommended to make this reduction,” he adds.
Another issue that could block or slow down the advancement of this technology in the country is the growing use of bank transfers as a means of payment, with the benefit that they do not have the tax burden of card transactions. There is a legal vacuum and the sector is asking the Central Bank to address the issue.
