EXCLUSIVE: “Rebuilding Trust” – Roberto Dumerauf, CAME Pagos and Sonia Gomez, ACI Worldwide in ‘The Paytech Magazine’

Roberto Dumerauf of CAME Pagos and ACI Worldwide’s Sonia Gomez consider how payment tech is putting Argentinian business back on the road to success

The recent history of the Argentinian economy is a great source of frustration for those who depend on it. The biggest Spanish-speaking country in the world is blessed with natural resources, a large population and neighbouring trade partners that are mostly friendly – at least off the football pitch. Despite that, Argentina has consistently failed to enjoy sustained, reliable economic growth, and it has proven slow at adopting the kind of tech-led innovations that have transformed the movement of money in different regions. Argentina’s money struggles were famously defined by the Nobel prize-winning economist Simon Kuznets, who said that there were ‘four types of countries: the developed, the under-developed, Japan and Argentina’.

In fact, this is an assertion so popular it came to be known as the ‘Argentine Paradox’, reflecting the fact that Argentina has failed to secure long-term prosperity, despite having every reason to have done so (unlike Japan, which has remained prosperous, despite a load of factors counting against it). The country’s economy has been viewed with scepticism by the international banking community for decades. Since joining the International Monetary Fund (IMF) in 1956, Argentina has taken on 21 separate lending plans, and $56billion of debt ($44 billion of which, the largest loan in the Fund’s history, was sourced under Argentina’s previous president, Mauricio Macri).

These massive intranational lending sprees were prompted by the South American nation’s declining GDP, and the unpalatability of lending to it in the eyes of many international bankers. In the words of Christine Lagarde, former head of the IMF, ‘we were the only game in town. There was nobody else, at the time, to invest in the recovery process… and, given the size of the challenge, we had to go big’. The size of these loans has caused knock-on problems for the flow of money throughout the Argentinian economy. Difficulty paying them back has led its government to start printing money, fuelling inflation rates that have topped 50 per cent per year. This has, in turn, led to capital controls on the purchase of US dollars in Argentina, a rising black-market dollar cost and price controls on more than 1,400 household items. Unsurprisingly, these factors have made doing business in Argentina rather difficult.

The proliferation of issues hasn’t stopped at the national level, either. For smaller businesses, local merchants and their customers, the COVID-19 pandemic has seen an enormous rise in fraud and identity theft. According to Roberto Dumerauf, CEO of CAME Pagos, a payments platform and digital ecosystem established by CAME, a confederation of Argentinian small and medium-sized businesses (SMEs), ‘fraud has exploded quite brutally during the pandemic. Identity theft and fraud attempts multiplied tenfold’. This has made Argentina a tricky market for interested acquiring banks to enter, as a market with a heavy reliance on cash and major issues around fraud and trust.

The COVID catalyst

The last few years have seen something of a transformation in this space. “In 2020 in Argentina, the number of virtual wallet users, or, more generally, the users of online payment tools, literally doubled. What drove this was the pandemic lockdown, which in Argentina was one of the longest and strictest in the world. We were forced to use alternative payment methods to those we were used to,” says Dumerauf.

Sonia Gomez is a director of solution consulting at ACI Worldwide, one of the world’s leading real-time payments solution providers. She believes those recent events have led to a boom in demand for cutting-edge payment solutions in Argentina.

“We’re now in a situation where, basically, the consumer demands it. They want unique experiences, freedom of choice, transparency over fees and omni-channel experiences,” she says.

This is particularly remarkable in a country where as much as 52 per cent of the population was unbanked as recently as 2018. Therefore, what we are seeing, in Argentina, is a country rapidly learning to rely less on cash, in a market in need of safe, secure, low-friction and trustworthy payment solutions. In fact, the scope for growth there is so large that the 2021 Global Payments Report from McKinsey predicted 2021 payment revenues in Latin America would grow by as much as 11 per cent, putting the country on level-pegging with the Asia-Pacific region and far outstripping the predicted growth rate of between four and six per cent in Europe, the Middle East and Africa, and North America. The market has proven highly responsive to new solutions. One month after the introduction of market-wide, interoperable QR code payments in December 2020, more than 100,000 transactions worth more than $3.2million had been made by January.

This sea-change in the way payments are made has led to an explosion in the adoption of digital wallets, where two-thirds of Argentinians with bank accounts have increased their use of digital wallets for payments, and more than 6.5 million of them have downloaded a digital wallet payment application in the last year. With around 30 different digital wallet options already in the market, it’s a segment that is dynamic and flourishing. Many in the industry, including Dumerauf, believe this is part of a more sustained cultural shift in how consumers and businesses manage money: “COVID was a catalyst that accelerated change, but it’s definitely here to stay,” he says.

“Managing this change successfully requires a cultural shift away from cash. It’s a big battle – not with the banks, but with cash. And it’s that battle we have to focus on. If we have [regulators] by our side, with the banks and fintechs on the other, we can work together to find better alternatives.”

In order to respond to this sudden leap in digital wallet-brandishing by customers, merchants need trustworthy, frictionless payment processors. Live since 2020, CAME Pagos has been able to provide a digital payment infrastructure that’s easy, affordable and secure.

Working alongside a confederation of more than 600,000 SMEs, it has agreements in place with VISA, payment processors, banks and e-commerce platforms to facilitate the development of a new digital ecosystem, one that seeks to optimise the merchant payment journey – and one that, notably, does not rely on international software solutions. Rather, it develops its own software and doesn’t buy in services from any third-party providers, making CAME Pagos a truly homegrown initiative. Another notable feature of its approach is its work on facilitating secure customer onboarding, as part of a larger effort to combat fraud.

“Onboarding involves properly ensuring that the person registering is really who they say they are and addressing any friction at the point of payment so that the process can be as clear, simple and transparent as possible,” says Dumerauf, who says CAME Pagos has a commitment to easy onboarding, backed by a robust anti-fraud infrastructure.

“When we talk about transparency of information, we mean reliable information around time and format across all the operations carried out,” adds Dumerauf. “This is something that merchants and users are going to value and do in fact value hugely.”

By creating a payments system like this that promises low costs – CAME Pagos boasts the lowest transaction costs on the market – high trust and a lower risk of fraud, it is able to effectively link Argentinian merchants with acquiring banks that haven’t been able to access this market before now. Part of this relates to an attempt to ‘democratise payments’, to build payments systems that work in the interests of those who rely on them, eliminating the kind of point-of-sale transaction costs that have made making the leap from cash unappealing previously. This new ethos has allowed merchants to use technology to improve their own access to, and understanding of, the payments process.

“Merchants want to spend their time doing what they do best: selling. And payment providers or acquirers dedicate themselves to their business, which is offering payment solutions to a merchant, which is what they do best,” says Dumerauf. “But, for the processors and the acquirers, their job isn’t finished when a transaction is put through, because afterwards they have to register all the details of that transaction with the users’ accounts, and this forms part of the service that every one of us offers to merchants. The whole life-cycle of a transaction must be understood as one single operation, which only ends when the operation is accredited and registered with banking systems.”

Transparency in that value chain is vital, says Gomez. She adds that ACI’s technology has allowed acquirers to ‘send quality transaction information and data on time, so that merchants can make the right decisions at the right time, and, ultimately, meet the requirements of different actors’.

For Gomez and ACI, successful implementation involves combining innovation with security.

“We provide a modern, secure and trustworthy solution which is innovative, digital and, above all, flexible for our clients, with the possibility of effortless expansion to manage every payment type,” she adds.

This approach means the technology is finally available to eliminate barriers that traditionally make these kinds of major infrastructure changes difficult. A focus on flexibility and a commitment to
Cloud-based solutions has also allowed CAME Pagos to offer an adaptive solution to merchants, as Dumerauf explains: “Everything we do is Cloud-based, from the back office to the applications themselves.. And its elasticity has allowed us to test pilots very quickly.

“Also, in the past some aspects of technology were put under huge pressure by certain [payment] events, such as Black Friday. All this almost disappeared when this great enabler that is Cloud technology came along. Business life became much easier because, ultimately, it aims to serve business, whatever system you’re working with and that’s genius of Cloud technology.”

No risk, no reward

“Cloud computing is a technological enabler and a driver of innovation,” agrees Sonia. “The reality is that if you don’t risk trying then you can’t create experiences. Cloud makes a series of resources available with which to try to challenge the business”.

She believes these innovations could lead to a transformation in the way the whole industry interacts.

“Traditional acquirers effectively took charge of dealing with technological complexities. They were orchestrators and integrators of the different actors in the ecosystem, and resolved everything that wasn’t the core business. A process of evolution is now under way, from the ecosystem rails they created, and ACI is assisting both traditional acquirers, and the new ones entering the ecosystem.”

Her belief is that this will allow merchants to meet their customers’ ever-changing demands, because ‘the consumer doesn’t care if you have a payment platform; they care whether they can use any merchant and make all the purchases they want to.”

Get this right and merchants will be able to sell more, with less friction than ever before, she says. However, it’s not easy to reap the rewards of lower fees using easier and more lightweight systems when state regulation works against you. A law introduced in the summer of this year, for example, places a 1.2 per cent surcharge on digital account movements by businesses in Argentina. It was a step taken, allegedly, in the interests of maintaining a ‘level playing field’ between established banks and newer market entrants.

But it feels unfair, says Dumerauf. “The excuse is equalising conditions, but we are at a clear disadvantage since many activities are prohibited for us,”

For global organisations like ACI, there is the potential to influence policies like this across the Latin America region, to ensure innovation is not stifled.

“Regulators are part of innovation,” insists Gomez. “And through initiatives like PIX [the new instant payment system from Central Bank of Brazil] and open banking, regulators are inviting different players in the ecosystem to voice their opinions, so they help define the rules of the game.. “We all need to play our part in working with regulators to bring new ideas, sources of income and, above all, collaboration to support new entrants.”.

This article was published in The Paytech Magazine #10, Page 14-16