In Payments

Carrying on the conversation about P2P and mobile apps, which began with the analysis of mobile payments with Pix in Brazil, the Americas Market Intelligence (AMI) payments team is continuing with other regional examples. This time, we will be talking about MODO in Argentina and PLIN in Peru, two P2P payment apps that reflect the scope and competitiveness of this new payment model in Latin America, which has demonstrated impressive levels of adoption in other countries as well as Brazil.

Below is a summary of the April 25 AMI Payments Coffee Chat. Payments Coffee Chats are weekly Zoom meetings where experts on payments in Latin America discuss the latest advances and trends in the sector. You can register for and attend AMI Payments Coffee Chats free of charge.

AMI Payments Coffee Chats for Latin America

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MODO in Argentina: An Entire Ecosystem of Digital Payments on the Cell Phone

In the April 25 AMI Payments Coffee Chat, we were joined by Rafael Soto, CEO of MODO. MODO is the leading digital payments facilitator in Argentina, as it has direct access to most of the population, through its allied banks. We are allied with virtually all the banks in Argentina, says Soto.

How MODO Works

MODO has a P2P solution capable of sending and receiving money to and from bank accounts through its app, which employs the user’s cell phone number as an identifier. MODO also has a retail payments solution using QR-code scanning, either from the store’s payment terminal, or through a printed QR. “In just the year and half since our launch, we now have seven million users out of the nearly 20 million Argentines that use digital banking,” says Soto.

MODO’s Impact in Argentina

Argentina has one of the highest rates of financial inclusion in Latin America. In April 2021, the Central Bank’s half-yearly Financial Inclusion Report found that 95.3% of the adult population of Argentina, or 33.3 million, have at least one traditional bank account. For MODO to achieve a real impact in the market, it needs to promote the transition to digital banking because, as Soto says, “there are a lot of bank account holders who don’t actually use them.” MODO’s alliance with traditional banks in Argentina, including Itaú and Santander, would facilitate this transition toward digital transfers.

Now, if we compare MODO to other payment solutions around the world, we find that it has most of the features the other leaders offer. MODO allows for real-time payments (RTP), P2P money transfers, payments to retailers, and the use of debit and credit cards.

In addition, something particular to MODO is that it is available through its own app, and also within Argentine banking apps. “This feature is rather unique in MODO, as it allows the user to join a complete payments ecosystem on their cell phone,” Soto says. Currently, according to Soto, 25% of transactions by MODO users are done directly in the MODO application, while three quarters of payment transactions with MODO are done from banking apps.

How MODO Processes Instant Payments

MODO has a novel feature, which is that, when reading a QR code, it interacts with the “acceptor” wallet through a payment administrator such as COELSA or PRISMA. This acceptor handles the interbank transfer in real time, as shown in the diagram below.


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PLIN: An Instant-Transfer Venture in Peru with Local Technology

The April 25 AMI Payments Coffee Chat was also joined by Serge Elkiner, CEO of YellowPepper Holding, the company responsible for the PLIN app in Peru and its system of instant transfers, which is run through YellowPepper. PLIN is a banking solution that began with three banks that are present in Peru: Scotiabank, Interbank, and BBVA, who built the operational infrastructure. There are currently eight banks allied with PLIN, and there is a long list of banks in the process of joining the ecosystem, explains Elkiner.

How PLIN Works

Unlike MODO in Argentina, PLIN does not have a separate app. In fact, it lives inside each banking app, where YellowPepper is a facilitator of technology. It is, then, the banks that decide the strategy, vision, and direction of this tech solution.

PLIN also has a People-to-Merchant (P2M) service that works through QR codes. However, the lack of regulation in Peru in terms of interoperability has hindered the possibility of an open payments ecosystem. “Basically, each wallet that currently exists in Peru works as a closed circuit. There are open circuits, but they are based on the Visa and Mastercard standards. We hope in the very near future that interoperability will become part of the discussion, either within banks themselves, or through new regulations. This will also depend on market dynamics,” says Elkiner.

Instant Transfers with Local Technology

For Elkiner, the big difference between PLIN and the apps in Argentina, and also with respect to Pix in Brazil, is that there is currently no “local” ecosystem of real-time payments (RTP) in Peru—in terms of an updated ACH model for making transfers in real time. On the contrary, whether it is Yape or other payment apps, the current way to move money uses the rails of Mastercard or Visa.

That said, soon in 2022, the CCE, Peru’s electronic clearing house, will launch the first RTP system with local technology in Peru. “Our YellowPepper platform, which supports everything to do with PLIN and is entirely ‘agnostic’ to any rail or brand, will integrate the CCE’s RTP. Then, each bank in Peru, or business, will decide individually how to ‘move’ the money,” Elkiner explains.

PLIN’s Impact in Peru

PLIN’s CEO sees a need among the banked population of Peru to have better services and a better user experience, even though the country’s banking rate is more than 50%. In this respect, PLIN has experienced enormous growth, currently with 6.5 million Peruvian users of this service. However, “although we have achieved a great deal in terms of adoption, we have achieved much more in terms of the transaction rate year after year, where we have seen increases of 400%,” Elkiner says.


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Other Prominent Instant Payment Models in Latin American Countries

“At AMI we are seeing a trend in instant payments throughout the region, extending to countries such as Costa Rica, Bolivia, Colombia, Guatemala, and Panama,” says Lindsay Lehr, Head of Payments Practices at Americas Market Intelligence, and moderator of the AMI Payments Coffee Chat. “We have gone from a paradigm where cards try to cannibalize cash, to one where cash and cards are also competing with bank transfers.”

In fact, analyzing local sources of information, it has been found that the penetration of electronic transfer mechanisms has increased in terms of total volume of transactions. One of the markets that is perhaps trailing behind most is Mexico, where CoDi has not had the acceptance anticipated.

What is certain is that the Latin American region is experiencing megatrends in payments that are generating new consumer habits, new regulations, and opening the doors to new financial solutions. (In fact, we recently held a two-day webinar on these megatrends, and you can obtain an informative breakdown of what we discussed on day 1 and day 2 of the webinar).

Please note that Brazil’s data is for Q4 2021, and Mexico’s data is for Q1 2022

Download the AMI Payments Coffee Chat presentation

Instant Money Transfers Compete for Market Share

We also invite you to register for AMI Payments Coffee Chats to get the latest first-hand news on the payments sector in Latin America.


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Moving Beyond Chats

Contact us if you would like a detailed investigation into P2P payment models in Latin America, or an assessment of competitors in a specific market. Americas Market Intelligence can design and implement a personalized study focusing on solutions to enable your company to minimize risks and increase its chances of success.

In addition to models of P2P payments, mobile payments, ACH, and instant transfers, our market intelligence team can help you with research on a range of relevant payments-sector topics in Latin America, including cryptocurrenciesBuy Now Pay Latere-commerce, payment methods between consumers and SMBs, mobile wallets, open banking, and much more.

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