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Payments Evolution and the Road to Future Innovations

By Xabi Valdecantos - Arcus Financial Intelligence
Vice President of Product

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By Xabi Valdecantos | Vice President of Product - Mon, 01/09/2023 - 17:09

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About 90 percent of the retail payments processed below MX$500 are made in cash. Only about 60 percent of the population is banked yet there are more than two smartphones per person in Mexico. Although there is a clear appetite for digital services, a big majority of consumers does not have the means to easily consume them due to the lack of the right payment tools and capabilities. 

Throughout 2022, Arcus has been committed to providing real-time payments solutions, cash-to-digital services, and APIs to allow companies to reach customer segments that had been unreachable until now. By introducing these technologies, Arcus is helping the banking and financial industry become more accessible for both new users and existing customers.

In line with our work of powering real-time payments in Mexico, we are constantly seeking innovative ways to work together with regulators to create the most comprehensive payment infrastructure in Mexico. Our mission is to enable anyone with a smartphone to transact and make payments for digital services in a fast, simplified, and secure way. 

By working closely with the regulators, Arcus is committed to providing innovative solutions that are secure and compliant with relevant regulations. With real-time payments, cash-to-digital conversion APIs, and open banking schemes, Arcus' view aligns with a future where financial operations are ubiquitously accessible regardless of the institution or app being used.

As we help the market evolve from a cash-centric to an electronic payment economy, we are encouraged to see how the acceptance ratio and the appetite for electronic payments rise. This is evidenced by the double to triple-digit increases in electronic payments from consumer and business accounts to account transfers in recent years.

As electronic payments become more widespread and secure, the service  has the potential to be beneficial for businesses of all sizes. By enabling secure electronic payments, businesses can reduce costs associated with cash or card transactions, as well as save time on paperwork and other administrative tasks that come with manual transactions. Furthermore, electronic payments provide an opportunity for businesses to offer their customers more convenient payment options that may not have been available before. Monetizing and building payments operations will be transformed to become a commodity for any business.

By creating an open financial system, we can drive further innovation in financial services. We believe that this type of open finance will increase collaboration between companies and consumers and create more opportunities for the latter to transact safely and securely within any financial institution or app, facilitating quicker product turnaround. 

In my view of how future financial schemes will work, I anticipate a completely new operational model. Banks and financial institutions will move away from their traditional role of providing face-to-face services to a back-office-like shop, where processing and executing transactions is the main focus. This shift will allow banks and financial institutions to focus on what they do best: provide a secure environment for their assets. 

Within this newly evolved ecosystem, both financial institutions and central banks will keep playing a key role. Their participation, in fact, will become more targeted to the core services of the financial businesses (underwriting, asset custodian, trusts, etc) rather than dealing with the forefront processes of operating their current services. By concentrating their efforts on these core services, they will, on the one hand, provide more catered programs for their customers and be capable of scaling the quality of the provided services as their efforts will be concentrated on the task at hand. On the other hand, the last mile of the service will evolve into unprecedented and unseen possibilities. 

To get closer to this vision, Arcus has already developed APIs, such as its cash conversion API and real-time payments API. These APIs are focused on providing open access to financial data, allowing companies and customers to safely exchange value and make payments in a secure environment. Moreover, Arcus also provides robust authentication services that help ensure the safety of both parties while they transact. We understand that companies need to adopt a multirail payment strategy to meet consumer demand, which is why we are proud to help our partners become a part of the ongoing evolution to support a broader range of payments and provide a seamless, integrated, and affordable experience for all. Our solutions help our clients increase user retention rates, increase transactionality, generate loyalty and become the center of their consumers' financial lives.

We invite everyone from established financial institutions to startups to work with us to build the future of financial services. Our APIs and real-time payments infrastructure provide the foundation for a new era of innovation and collaboration. Let's work together to make the future a reality.

Photo by:   Xabi Valdecantos

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