26 min read

In an interview to CWS, the president Fernando Teles reveals how the company has been using the technology to improve electronic payments in Brazil – even at public transportation. If it was up to the american multinacional, cash life is about to be over. 

In an interview to CWS, the president Fernando Teles reveals how the company has been using the technology to improve electronic payments in Brazil – even at public transportation. If it was up to the american multinacional, cash life is about to be over. 

You wake up late for work so you leave home in a hurry and give up having a  cup of coffee on the way because of the waiting line at the cashier of the coffee shop. Finally, when you get to the subway you open your wallet to buy  the ticket and realize you forgot to withdraw some money. Fortunately, inconvenient situations like this one can be left in the past.

That’s because credit card companies have been inserting the NFC (Near Field  Communication) technology in their operations. It’s about payment via approximation –  no password needed – in order to speed up the process, enable digital money and bring  more comfort to the user.

In Australia, for example, this MO represents 92% of the transactions. Worldwide, 1 in 5  transactions are made contactless. 

Even though our infrastructure is being improved, Brazil is still at the beginning on  implementing this new way of payment. “There are more than 3 million apropriate  terminals accepting this tech”, affirms the president of Visa in Brazil, Fernando Teles.

In charge of the brazilian operations for a little over 2 years, Teles is focused on adding  more and more digital actions in brazilian’s daily lives mostly cutting the red tape of  financial transactions. The last action, for example, was launched in Rio de Janeiro in  partnership with the city’s subway.

All 41 subway stations implemented the payment via approximation. The user  can now go to the subway and not have to worry about recharging his card or  bringing cash in his wallet to buy the ticket.

De olho no digital

Visa’s Fernando Teles: “We are working on creating the first cashless isle in Brazil. Photo: Press.

To try the new access form you just have to go to one signed validator and approach your personal credit card or mobile device with the NFC tech.

“The  novelty will allow the client to save time and a better flow on boarding”,  explains the entrepreneur.  It will be charged along with the credit card bill with no additional cost or tax at  the end of every use. “Clients will also be able to use their Visa card in digital  wallets like Apple pay or Samsung Pay in order to do the payment via  approximation.”

Future cities in the present

Another strategy being implemented is the NADA bracelet, accessory part of  the “Future Cities” program. As its name suggests, it’s about a bracelet which enables payments via approximation in cities with low infrastructure that lack  ATMs or internet signal, for example.

Fernando de Noronha (PE) is one of them. “Tourists and residents end up relying a lot on cash and ATMs which could be a little inconvenient and unsafe  if you’re on vacation or doing business”, affirms Teles.

To better understand the impact of the digital payments on the economy, Visa  hired the Roubini ThoughtLab to conduct a study analyzing 100 cities around  the world.

The study was called “Cashless Cities: Realizing the benefits of Digital Payments” and it quantifies the liquid benefits for clients, companies and even  the governments according to the city’s cashless capability.

The gain by replacing physical money to digital money could reach US$ 470 billion per year in all 100 analyzed cities, which represents around 3% of the average GDP between them. If we consider São Paulo and Brasília together the profit would get to US$ 13 billion. 

The cities that rely the most on cash would have very significant results with  an estimated impact of almost US$ 13,5 thousand per year for every million  dollars on revenue per company. Gains could be substantial for all of them including the ones with a higher digital payment structure where the benefits  would be around US$ 10,8 thousand per year for every million dollars on revenue per company”, says Fernando Teles.

While the economy of time could get to 3,1 billions of hours. The companies, according to Teles, could beneficiate even more from sales when accepting  digital payments because there’s a possibility of reaching a larger clientele through these channels.

“Physical stores tend to sell more when they accept these forms. Our research has shown that even the companies that are still taking their first steps towards the digital transformation could increase their sales in 7% when  they start accepting digital payments”, reveals him.

In the interview below, Fernando Teles talks about Visa’s digital initiatives and  the challenges nationally on the field: 

CWS: The contactless transactions are already a reality worldwide. How are we on that? 

Fernando Teles: Contactless transactions are a reality in many countries all over the world. In Australia, for example, after adopting this new way of payment we can observe a drop in the use of cash. In Brazil, the acceptance rate is more advanced and there are more than 3 million appropriate terminals  for this tech. There are more banks, retail stores and fintechs betting on  convenience and agility brought by the product offering a card equipped with  the contactless tech to their clients. 

CWS: How has Visa been ensuring safety in this kind of operation? 

Fernando Teles: In 2016 Visa and its partners came up with the wearables for  payment such as watches, bracelets, stickers and even rings. Also on that  same year we started offering the tokens which allow payments to be executed via digital wallets with an extra security by replacing secret information like the client’s name, account and expiring dates for a unique digital token without exposing any info. 

CWS: Another initiative is the “Cities of the Future”. How does that work?  

Fernando Teles: The goal of the program “Cities of the Future” is to bring the  benefits of the digital payment such as security, formalization of the economy, efficiency and convenience to more cities around Brazil. It is a work with partners and clients like accreditors, emitters and stores to encourage the use of digital payments where cash rules, focused on local evolution. 

CWS: How many cities is it going to take over?

Fernando Teles: We started in 2018 in 3 cities: Maringá, Belém and Campina Grande. We’re going to expand to 200 cities all over the country. The cities have been chosen for being important evolution centers with a big influence of cash and also based on the “Digital Payment Maturity Index”, a research by Visa Consulting & Analytics that classified the cities in four stages related to the digital payment evolution level. We’ll throw many promotions to induce the use of the card, finantial education actions and enlarge the production and acceptance of digital payments.

CWS: The NADA bracelet has started to be implemented in Fernando de Noronha. What should be expected from that project? 

Fernando Teles: The NADA bracelet is part of the program “Cities of the Future”. Fernando de Noronha is one of those cities but due to its location it lacks a little infrastructure like some abscence of internet, an obstacle for the use of digital payments. Tourists and residents end up relying a lot on cash and ATMs which could be a little inconvenient and unsafe if you’re on vacation or doing business. In order to make their lives easier, we invested in NADA, a bracelet that enables you to pay just by approaching it to the terminals spread over the city. With the help from our partners, we developed a system that works all over the island without needing a 3G signal or connection. With that in mind we’re on our way to creating the first cashless island in Brazil, one of the most beautiful destinations in the country. The bracelet itself was created for the case of Noronha but it can be used anywhere just like the other devices such as phones and watches. 

CWS: Even the governments of the cities analyzed by Visa’s research can gain from digital payments… 

Fernando Teles: The study “Cashless Cities: Realizing the Benefits of Digital Payments” has shown that digital payments can reduce costs for the governments and even crime rate: when they reach a desireable cashless capability, governments of all the 100 cities can get to US$ 130 billion per  year in benefits. Consequently, there’s a higher tax collection, growth on the economy, increase in the administrative efficiency and reduce costs with the criminal justice due to the decrease on the crime rate. 

CWS: What about the customer? 

Fernando Teles: Digital payments can help the customer save time and
money no matter what their income is: when they reach a desireable level of cashless capability, customers of all 100 cities can get almost US$ 28 billion in benefits per year. Those benefits came as a consequence of the 3,1 billion saved hours in bank transactions, retail stores and transportation. Not to mention the drop in the money related crime rate. The study has shown that in all 100 cities the customers that don’t have a bank account spend between US$ 7 and US$ 15 to withdraw money from checks. Those customers could save from US$ 84 to US$ 150 per year. Digital payments – specially mobile methods – help a finantial inclusion because they can give access to finantial services to those who don’t have bank accounts. 

CWS: A lot is spoken about transfering resources between civilians with no need for a bank account. How is that possible and how will it interfere on the customer’s daily lives?

Fernando Teles: Instant payment technology allows to transfer from one card to another at any time of the day through social media or an app in your smartphone – although it doesn’t stop needing the payment institution or credentials. The system beneficiates people who don’t have bank accounts because they can use a prepaid card. That eliminates the need to pay taxs such as DOC or TED and staying hostage to bank schedules, making transactions faster, easier and more comfortable. An extra option for transactions between people or companies. 

CWS: The digital will be Visa’s great bet for the next years then? 

Fernando Teles: No doubt. Visa will remain focused on its mission to connect the world through a reliable and secure digital payment network that allows people, business and the economy to thrive. 

CWS: There is a lot of talk about resources transferring between people without having a bank account. How is that possible and how does it reflect on the customer’s daily lives?

Fernando Teles: The instant payment technology allows a money transfer from a card to another, anytime, in a social media or smartphone app – but this does not exclude the need for payments, they keep being part of transactions, as the accrediting companies. The system benefits people who do not have a bank account, as they can enjoy the technology using prepaid cards. This eliminates taxes like DOC and TED, and the customer does not have to be hostage of bank hours, bringing simplicity and speed in transfers, with more convenience. A new option for people and even for companies.

CWS: Is digital, in the next few years, Visa’s new major bet?

Fernando Teles: Without a doubt, Visa will continue its mission to connect the world through a reliable and safe payment network, that allows individuals, businesses and economies to prosper.

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