BBVA Peru teams with Visa-backed fintech to compete with cash

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BBVA Peru is the first bank to deploy a real-time mobile payments platform designed by YellowPepper, following Visa’s May 2018 investment in the Miami-based fintech.

YellowPepper platform offers Zelle- and Venmo-style payments, and aims to replicate cash’s immediacy and universal acceptance. It targets P2P, B2B and shopping payments.

“The value of cash in Latin America is that, when you give cash to merchants they get it immediately,” said Serge Elkiner, YellowPepper’s CEO. “But when you make debit or credit card payments, merchants get the funds three or four days later. So they prefer being paid in cash to accepting digital payments.”

YellowPepper chose Peru, where Mastercard-owned Vocalink is building advanced real-time payments infrastructure for the national ACH system, as the launchpad for its platform.

“We want to push our real-time platform to as many banks as possible across Latin America after launching in Peru in partnership with BBVA Peru,” said Elkiner. “Brazil is the biggest Latin America market, so we want to see how we can launch our real-time platform there.” YellowPepper entered the Brazilian market in October 2018.

The real-time system due to be launched in late 2019 by Vocalink and Peru’s bank-owned ACH system, Cámara de Compensación Electrónica (CCE), will use phone numbers as proxies. It will coexist with BIM (Billetera Móvil), a mobile wallet for unbanked and underbanked consumers developed through the Modelo Perú consortium by the Peruvian banking association ASBANC (Asociación de Bancos) and leading telcos.

“We’re connecting to Vocalink’s ACH platform in order to be able to provide every single rail the ecosystem wants,” said Elkiner. “We’ve integrated the rails that enable us to offer real-time P2P transfers, such as Visa Direct and Mastercard Send card-to-card payments plus ACH transfers. We plan to add more rails such as international remittances or blockchain transactions.”

Juan Fernando Maldonado, head of retail products at BBVA Peru and a CCE director, said the Spanish bank will launch its YellowPepper-based platform in late September.

“The first version will be a P2P transfer service via debit and prepaid cards involving three banks: Interbank, Scotiabank and BBVA,” he said. During 2020, the three banks will roll out two further phases for shopping and B2B, using QR codes and possibly NFC. They expect to have a million users of their service by the end of 2019.

Maldonado said that initially the three banks will use only Visa Direct, but that they intend to also support Mastercard Send and ACH payments, once the Vocalink-supplied ACH system is live.

The three banks plan to add other Peruvian banks to their consortium’s platform and eventually the system could be integrated with BIM to ensure interoperability between the two schemes, Maldonado said. This means YellowPepper’s platform could serve banked and underbanked Peruvians.

YellowPepper operates in 10 Latin American countries, and sees itself as a defensive play for banks so they don’t lose out to nonbank fintechs and the likes of Apple or Google.

“We’re a fintech helping banks keep an edge against big tech firms and accelerate the development of their digital offerings,” said Elkiner. “When banks come together to build a system like Zelle, it’s very effective.”

Latin American governments have encouraged bancarization, instant payment schemes, and rollout of POS terminals to merchants to drive businesses and consumers into the formal economy and increase tax revenues. YellowPepper’s software helps in this process, as it enables non-NFC-enabled terminals to accept mobile payments through QR codes, Bluetooth or one-time passcodes. In Colombia, it offers banks the ability to instantly issue virtual payment cards to new customers’ smartphones.

Mexico and Peru are developing QR code-based instant interbank payment networks to increase financial inclusion and reduce cash usage.

Visa is targeting growth opportunities for digital payments in Latin America by providing open access to fintechs to its APIs. In 2017, YellowPepper agreed to incorporate Visa’s APIs including the Visa Token Service, Visa Checkout and Visa Direct in its platform.

Last month, Visa and YellowPepper announced Latin American partnerships with Brazilian payment technology vendor HST. YellowPepper and HST will create consolidated digital payment offerings combining both companies’ technologies, while Visa and HST will develop solutions such as mobile wallets integrating Visa’s open APIs.

“We’re working with YellowPepper to help Brazilian third-party processors digitalize their service delivery, and to drive P2P payments via Visa Direct and other card networks,” said Alessandro Rabelo, Visa Brazil’s products executive director.

In Brazil, YellowPepper is working with Visa Brazil and one of the biggest domestic Visa issuers to develop an online payment solution based on tokenization. YellowPepper declined to name the bank.

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Digital payments Real-time payments P-to-P payments ACH BBVA Visa Peru