Visa has partnered with NovoPayment to address Covid-driven demand for digital payment services in Latin America. The continent’s massive e-commerce expansion and the need to receive government aid and make contactless and P2P payments has seen banks and fintechs scrambling to provide digital accounts to financially underserved consumers. Robin Arnfield reports
NovoPayment and Visa have launched Prepaid in a Box, a white-labelled platform offering instant issuance of virtual accounts and prepaid and debit cards, government aid disbursements, and P2P payments.
The goal of the platform is to increase financial inclusion, as an estimated 45% of Latin Americans are still unbanked.
In December 2019, Visa invested in NovoPayment as part of the two companies’ strategic partnership to enable banks and merchants to deploy Visa’s digital solutions in Latin America and the Caribbean (LAC).
Prepaid in a Box is the result of the two firms’ technological and commercial collaboration. It has two initial use cases:
- A solution for instant issuance of virtual accounts to address obstacles to the growth of online and other card-not-present transactions;
- A remittance and disbursement solution designed to streamline the delivery of funds to banked and unbanked individuals, for example originating from family abroad or government aid. An optional physical card can be provided.
“The idea behind Prepaid in a Box is to remove a lot of the complexity and barriers issuers face in building and deploying Visa prepaid services and the barriers to users getting access to them,” says NovoPayment CEO Anabel Pérez. “Issuers don’t need to be payments experts or build any integrations or interfaces. Using our platform, they can issue virtual cards to users’ smartphones in minutes, as well as physical cards.”
Founded in 2007, NovoPayment operates in 11 countries across the Americas. The Miami-based fintech provides API-based technology to enable Latin American banks and fintechs to deploy prepaid, credit and debit card programmes plus real-time payments services such as Visa Direct. It also has a digital banking-as-a-service platform.
In recent years, NovoPayment has won customers including Latin American ondemand delivery service Rappi, whose Rappi e-commerce app and RappiPay wallet are used widely across the region; Mexico’s Banorte; and two Colombian banks, Davivienda and Banco Pichincha.
NovoPayment and Pichincha provide Rappi with Visa prepaid cards for its delivery drivers in Colombia, while Davivienda uses NovoPayment to issue Visa prepaid cards for users of its co-branded RappiPay Davivienda wallet.
NovoPayment is certified by Visa as a partner in its Visa Ready programme, which provides fintechs with access to Visa APIs for developing payment services. In addition, the two companies have been collaborating to roll out the Visa Token Services tokenisation platform and Visa Direct in the region.
Market research firm eMarketer predicts that e-commerce will grow by 19.4% in LAC during 2020, while mobile commerce will expand by 32.2%.
Visa LAC’s research indicates that the rise of e-commerce in Latin America during the pandemic has led to a surge in new digital payment accounts.
“We’ve seen a shift from the underbanked to digitally-enabled financial consumers who use digital methods such as prepaid cards instead of going to bank branches,” says Ricardo Tafur, Visa LAC’s head of consumer payments. “The data on the activation of payments credentials shows that debit accounts have really been charging forward for first-time e-commerce users and for contactless in-person payments.
“The necessity to shop online during the lockdown meant that consumers saw debit as the way to jump into e-commerce for the first time,” Tafur adds. “Also, the debit cards which have been issued are contactless-enabled, leading to significant growth in contactless debit issuance in key LAC markets.”
According to Visa, active Visa e-commerce credentials increased by 11% between the second and third quarters of 2020 in Brazil, while spend per active Visa credential increased by 12%.
In markets where e-commerce is lees developed, there are examples of dramatic changes in adoption. Argentina experienced active Visa e-commerce card growth of over 100% from between the second and third quarters of 2020.
Another driver of new payments accounts in LAC is the massive among of government aid disbursed during the pandemic to bank accounts and digital wallets. According to research by IMCO in April 2020, governments across LAC plan to disburse $94bn in emergency aid this year.
“Many incumbents and even disruptors weren’t able to support the programmes that were rapidly deployed in many Latin American countries for emergency aid disbursement,” says Pérez. “So our solution is designed to support the need for people to receive government social programme disbursements digitally.”
According to Pérez, following Prepaid in a Box’s launch in early September, there has been a lot of interest, with several banks and issuers already in the process of deploying the platform. However, NovoPayment is unable to disclose the names of any users of the platform yet.
“Because of the pandemic, banks and issuers realise they need to offer end customers instant solutions for onboarding them and issuing prepaid cards, so they can start to send and receive money and spend their funds digitally,” Pérez says. “The new platform gives issuers the ability to deploy instant virtual accounts and disbursement programs in 10 weeks.”
Visa-branded cards issued through the platform can be tokenised for greater security during remote transactions, Pérez explains. “Use cases for the cards include P2P payments, gig economy payments such as salaries to Uber and Rappi delivery drivers, paying for purchases on Amazon or MercadoLibre, or subscriptions on Spotify or Dropbox,” she adds.