BancoEstado is hoping to make strides in the Chilean payments industry, with plans to develop its own mobile wallet and massively scale a new mobile point of sale system this year.
The state-owned Chilean bank is looking into developing its own digital wallet, Leopoldo Quintano, Banco Estado’s head of quality and marketing, told iupana.
A digital wallet would allow account holders to pay businesses for goods and services with their mobile phones. It will compete with similar products from other banks, such as Bci’s MACH, which is also aiming for widespread adoption.
The digital wallet plans follow the success of a partnership with PagoClick, a mobile wallet that can be used to pay for gas. BancoEstado agreed a deal with the product, owned by gas station network Copec, in mid-2018. That connected BancoEstado accounts to the system.
“It was a tremendous success,” said Quintano of the deal. “More than 400,000 transactions went through in just a couple of months.”
BancoEstado is a state-owned bank with a financial inclusion objective, although it also competes with privately owned banks.
The bank is the largest deposit taker in Chile – with a 20% market share – although it disburses just 15% of the loans in the country. It has a lower profitability, in terms of return on average equity, than its commercial competitors. However, its reach gives it an advantage in electronic payments, which require widespread adoption by individuals and businesses for success.
Already BancoEstado offers free basic current accounts, known as Cuenta RUT, to anyone with a national ID. It has around 11 million individual CuentaRUT account holders, in a country with a population of around 18 million. Around a million of those CuentaRUT holders regularly transfer money to other accounts over that system, said Quintano.
MPOS scale goal
BancoEstado also aims to scale its new mobile point of sale system rapidly in the coming months.
The new system, known as ComprAquí, is intended to offer a simple payments option for small businesses that mainly use cash. The device connects with merchants’ smartphones, allowing them to accept card payments.
BancoEstado piloted the program in the fourth quarter of 2018, and has regulatory approval for a mass rollout.
“Now we are going to expand it,” said Quintano. “We want to reach a large number of clients.”
BancoEstado developed the technology through a joint venture with SumUp, a European financial technology company which also operates in Brazil.
ComprAquí will go head to head with Chilean merchant aquirer network Transbank, which dominates the local market for card payments. Transbank’s continued market leadership has been under question recently: the local competition authority ruled against Transbank last year, and subsequently Santander said it would end its 20-year old merchant acquirer deal with the company.