In Brazil, Payments Tech Will Leave Its Mark Long After the Olympics
The Rio Olympics has a lot of fans and athletes on high alert over concerns about contracting the Zika virus or competing in contaminated water, but the risks of financial fraud are another major concern.
Fortunately, the Olympics Village is often treated as a breeding ground of payments innovation, with athletes and fans alike given access to mobile and wearable technologies not available anywhere else. These combat the underlying current of very real risk to the wallets and safety of even local fans.
"Unfortunately, in Brazil we still have a high level of violence, and people still have the same needs as people in other countries. They have bills and a lot of expenses that need to be paid, and most of the time they have to do it with cash," said Ewaldo Del Valle, CEO of TR Process, a Sao Paulo-based technology company that's powering a card that combines EMV with access to the transit infrastructure in major Brazilian cities like Sao Paulo and Rio de Janeiro.
Brazilian financial services provider Caruana Financeira is introducing a branded card that can be used for transit payments and other card transactions. People can apply for the card at CF's branches, but also at transportation centers—CF has deployed self-service terminals in transit stations to allow application, authorization and issuance of the hybrid transit/payment cards. The terminals can also be used for transfers and bill payments.
While much of the payments technology announcements timed to the Olympics have been aimed at international travelers, including wearable technology tests, mobile wallets and expanded use cases for Near Field Communications, CF is making more of a local play to extend financial inclusion in the local population.
There's also a security element—it's safer to use cards than cash, and it’s safer to use one card that access public transit and also includes fraud detection, EMV and advanced authentication, Del Valle said. "It's much more secure to do things electronically and make payments in a more secure environment like a bus terminal."
Since the Olympics also serve as a showcase for new transit technology, the timing of the payments innovation is advantageous, Del Valle said. "We are working with transportation cards so we cannot afford to not be involved."
CF and TR Process are using imaging technology from Kofax to scan and retrieve images of ID documents (including the Brazilian ID card, Cadastro de Pessoas Fisicas), proof of address and income statements. These images extract information that feeds fraud analysis and payment processing workflows.
There is potential for hybrid payment systems. In Brazil, there are several “transportation-related card processor companies” that work with the public transportation system—via bus fleet owners or directly to city transportation management—ticketing services using pre-paid NFC cards for offline ticketing transactions, said Joe Nunes, a solutions consultant manager at ACI Worldwide in Brazil.
"Some of these companies realized that their pre-paid card business can be leveraged among users by adding a payment application," Nunes said. "The thinking is that the “unbanked” user can charge the same card and use it to not only to pay for a bus ride, but also to carry money in a wiser and safer manner."
But there are risks in hybrid payment and transit cards, Nunes said. "The average value of the ticketing transaction is very low, thus fraud losses are low; that said, the (reputational) damage to the ticketing card processor company image is high," Nunes said, noting that adding payment services into an EMV card makes that part of a card much more secure. "However, most card users neither care nor worry if the NFC ticketing application runs apart from pre-paid wallet and/or credit card."
Using electronic payments as a financial inclusion and security play is popular in emerging markets such as Africa. And in cities like London, transit cards are becoming more open to payments beyond commuting.