From physical cards to digital credentials: Tokenization and digital - - PowerPoint PPT Presentation
From physical cards to digital credentials: Tokenization and digital identity in Latin America Americas Market Intelligence February 2020 Payments industry 25 years experience advisory group in the region for companies operating in AMI is
Tokenization and digital identity in Latin America
February 2020
Americas Market Intelligence
Payments industry advisory group
for companies operating in Latin America
25 years experience
in the region
Full coverage
Caribbean
Executed
300+ projects
in the payments industry since 2003
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And moderated by Abel Delgado
AMI Digital Marketing Director
Justin Benson
CEO @ Spreedly
Eduardo Rivara
CEO @ Facenote
Lindsay Lehr
Payments Practice Director @ AMI
llehr@americasmi.com justin@spreedly.com edu@facenote.com
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The opinions and analysis presented today by Americas Market Intelligence (AMI) represent only the views of the AMI speaker and not of the panelists who are participating in today’s webinar or their respective companies. Whenever possible, AMI has verified the accuracy of the information provided by third parties, but does not under any circumstances accept responsibility for such inaccuracies should they remain unverified. It is expected that webinar attendees will use the information provided in this webinar in conjunction with other information and with sound management practices. AMI therefore will not assume responsibility For commercial loss due to business decisions made based on the use or non-use of the information provided In today’s webinar.
Moving from cards to credentials Acquiring & acceptance revolution Bank accounts as a payment method Race for the Superapp Fees trending toward 0
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Terminal-less acceptance
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192 credit and/or
debit card holders
268 non-cardholders
cardholding online shoppers
24 un-carded
216 online shoppers
In 2020…(millions of people)
Addressable market of 216 online shoppers, 89% of which own a debit card non-cardholders who do not shop online
Sources: World Bank, AMI analysis
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221 credit and/or
debit card holders
241 non-cardholders
252 online shoppers
(+16%) Most rapid growth among uncarded e-commerce shoppers non-cardholders who do not shop online (-14%)
cardholding online shoppers
(+14%) 31 million uncarded
(+32%)
In 2022…(millions of people)
Sources: World Bank, AMI analysis
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Online shopping bleeding into physical commerce, providing an alternative to both cash and physical card transactions
$0 $20 $40 $60 $80 $100 $120 $140 2019 2020 2021 2022
E-commerce in LAC, USB bn
Mobile Desktop
Sources: Interviews, AMI analysis, Mastercard Digital Security Whitepaper 2019
Mobile
49%
penetration
2019-2022 CAGR Of 216 mn online shoppers Retail
5%
E-commerce
19%
Use a shopping app
75%
Use a transportation app Buy food
64% 51%
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36 million
Millions of users
92 million 13 mn 5.5 mn 15 million 50 million+ consumers with card-on-file (25% of online shoppers)
Other digital natives Mobility Food delivery Supermarket Innovative brick-and-mortar Longtail merchant acceptance
Secure card-on-file will be a key strategic capability for merchants who wish to compete in the digital environment
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Physical card transactions will decline in share over time, potentially losing half its share within 10 years 90% 84% 68% 59%
8% 10% 19% 11% 2% 7% 13% 30%
2019 2022 2030 - conservative 2030 - aggressive
Card transaction breakdown forecast
Physical POS E-commerce QR code
Sources: AMI analysis
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Once digitized, payment credentials are sticky In-app card on file QR code NFC mobile wallets Wearables
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A rapid transition toward contactless is needed to help preserve physical payment infrastructure
Too soon to tell QR codes Contactless cards
Prevailing new payment acceptance technology
Sources: Local central banks, AMI internal data, interviews, AMI analysis
Penetration of card-present transactions in 2020 Contactless cards: 40%+ QR code: ~2%
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Over time, merchants must incorporate certain technologies to remain competitive Relationship(s) with a payment processor
Integrations Biometrics
Digital identity verification
Tokenization
Ability to store and secure payment credentials
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The gateway to a digital lifestyle
Sources: IDB, Good Intelligence, FinTech Times
% of population that does not have ID
Paraguay 20% Bolivia 19% Guatemala 17% Nicaragua 14% Haiti 13% Venezuela 13%
Mobile identity predicted to be a $7 bn opportunity globally by 2024
34 million Latin Americans do not have ID
1 bn worldwide lack ID
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Credit and debit cards are not the only physical credential going to the cloud
DNI Digital
launched in Argentina in 2019
Sources: Biometricupdate.com, Tribunal Regional Eleitoral-SP
115 million
(78% of population) Brazilians completed biometric voter registration by January 2020
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Trending rapidly for digital onboarding and transaction authentication
Sources: Good Intelligence, Biometricupdate.com, Visa, company websites
Already using digital identity technologies
Most common use cases
39% of issuers 14% of acquirers 18% of brick-and-mortar merchants used biometrics
2 bn
ATM transactions
for 35 mn customers using thumbprint
In a 2018 study by AMI and Visa on Innovation
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Passwords are perceived as insecure and inconvenient. Say goodbye to two-factor authentication and security questions
% of online shoppers, 2019 N=900
Mx Co Pe Br Ch Ar Cr Pr Dr Weighted average Payment security preferences “It is a hassle to use passwords when making purchases online” 49 43 46 47 42 46 54 51 40 47 “I wish I could use biometrics instead of a password to validate my identity” 77 79 80 71 75 68 78 67 78 74 Preferred feature for online payments Biometrics 72 82 81 74 81 72 83 63 81 75 Voice/speaker purchase 20 12 19 16 10 6 16 6 13 16 Chatbot online 17 23 18 13 19 12 23 11 21 16
Source: Mastercard Digital Security Whitepaper, December 2019: Examining the Latin American and Caribbean E-commerce Market
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Adoption challenges abound; like anything, a smart user experience is the most important component
Enrollment Validation Issuance Use
“creepiness factor”
sources of ID
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Forecasting potential future scenarios. What can we expect?
Brand recognition Value-added services KYC infrastructure
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Digitized credentials enable disruption of new payment flows, new ways to pay, and a pathway for financial inclusion
New payment flows enabled by digitized payment credentials
Payments via virtual assistants Corporate employee spending & fleet management Digital ID for financial inclusion Ticketing & event concessions Parking & tolls Cashier-less stores Better loyalty
Moving from cards to credentials Acquiring & acceptance revolution Terminal-less acceptance Bank accounts as a payment method Race for the Superapp Fees trending toward 0
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AMI’s Payments Practice’s monthly webinar series
Terminal-less Acceptance in Latin America
March 26th
Our objectives: 1. Do a deep dive into each of these six trends 2. Provide best-in-class content on a regular basis 3. Provide a platform for honest, open discussion 4. Answer your questions 5. Continually learn ourselves
Would you like to contribute? Appear as a panelist. Contact Lindsay at llehr@americasmi.com
Register here
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Justin Benson
CEO @ Spreedly
Eduardo Rivara
CEO @ Facenote
Lindsay Lehr
Payments Practice Director @ AMI
llehr@americasmi.com justin@spreedly.com edu@facenote.com