Brazil's embrace of digital commerce is providing juice for Santander's university smart-card program, which is growing by leaps and bounds as it lays the groundwork for the mobile channel.

Santander reports more than one million cards have been deployed in less than a year, bringing the total to 3 million in Brazil.  The Santander Universities card is meant to combine multiple functions, including payments and identification, making it a plastic version of the mobile wallet concept.

"The card allows a number of tasks to be centralized, so people don't need a number of cards for different things," said Vincente Prior, director of products and channels for Santander Universities, a division of the bank.

Santander has offered some form of multi-functional cards to universities for nearly 20 years, and leverages Near Field Communication technology through a partnership with Gemalto. The NFC-enabled university smart cards debuted in Brazil about three years ago, so in effect adoption has increased 50% in about a year.  There are more than 1.5 million NFC compatible terminals in Brazil.

The rapid uptake of smart cards for contactless payments creates a "culture of trust" in contactless technology that provides a path to mobile payments, Prior said. While it's too early to see widespread use of smartphone contactless payments, Santander already provides an app that's linked to the smart card, Prior said.

"We want the usage to evolve so mobile is the next device that they use," Prior said.

Santander Universities issues Gemalto's Optelio EMV cards, which use MasterCard PayPass technology for contactless payments. Students are encouraged to use the cards through discounts at certain bookstores, restaurants and study centers.

Other digital payment plays also rely on cards, given the relatively low smartphone penetration in Brazil. Pizza Hut, for example, ties it Brazilian loyalty program to a mobile app, yet still relies on a prepaid card to accept payments.

And even though smartphone penetration remains low, adoption is expected to expand quickly, suggesting the mobile app may enjoy the same fast growth as the contactless smart card.

Brazil is undergoing its migration to dual-interface cards," said Philippe Benitez, vice president of secure transactions at Gemalto. "Merchants are seeing a lift in spending and consumers are catching on that contactless is faster and more convenient than other forms of payments."

The quick growth in Brazil is attracting other payment companies, such as First Data, which partners with Bancoob on an initiative called Bin, which offers payment services. Global Payments views Brazil as a growth market and iZettle is pursuing the country's mobile point of sale market.

Local companies such as payment processor Pag Brasil are also chasing the emerging e-payments market.

"It's undergoing a very rapid transformation. Brazil has always been on the edge for many new technology plays, not just for payments, but also other mobile innovation," said Marcelo Tangioni, product vice president for MasterCard Brazil.

Tying PayPass to the university card is an opportunity for diversification, Tangioni said. "It's an opportunity for us to get into NFC in a different part of the market," he said. "Once you get 1 million users in a year, it's important to embrace this specific technology."

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