Mexican payment system CoDi makes progress

One year after its implementation, the CoDi digital platform accumulates a little more than 790 thousand operations of sent money. On the first day of operations - September 30, 2019 - the platform registered 1,747 transactions sent; by October 5 of this year, CoDi registered an accumulated 790,447 transactions sent.

As for the number of transactions sent, the first day of financial agreements registered 187 thousand 9 pesos, while on the last day measured - October 5 - the amount rose to 2 million 801 thousand 657 pesos.

According to data from the platform itself, so far there are 5 million 282 thousand 270 accounts validated, of which 65 percent belong to BBVA Bancomer; 13 percent to Banamex; 12 percent to Bancoppel, and 10 percent to the rest of the banks affiliated to the platform.

As of October 5, a total of 5 million 51 thousand Android devices have mobile apps affiliated with CoDi; while 1 million 623 thousand 651 devices belong to the iOS operating system. A total of 38 banks have already implemented the CoDi platform to facilitate transactions for users in our country.

In Mexico, it is estimated that approximately 8.4 million adults have access to mobile banking and 82 million people use a smartphone, so there is the possibility that millions of Mexicans now make their electronic payments.

WHAT IS THE CODI PLATFORM

The Bank of Mexico launched a new digital payment option called Cobro Digital (CoDi), which seeks to accelerate the change to a cashless ecosystem or cashless economy, one of the objectives of the current government.

Mexicans still prefer to pay with cash for transportation, rent, water, electricity, cable, telephone, and even fines and taxes. According to the National Financial Inclusion Survey (ENIF) 2018, between 87 and 95 percent of these operations are solved with notes and coins.

A minority are those who actually use credit and debit cards, use prepaid plastic, or direct debit their payments to an account. The rest do not because they prefer cash, they are not customers of the financial system, or because they do not trust the services offered by the institutions.

"In Latin America, cash is king, more so in countries like Mexico and Peru," says Americas Market Intelligence's study The State of Contactless Payments in Latin America.

In addition, 47 percent of Mexicans describe their relationship with their banks as failing and a quarter talk of high commissions and hidden charges, said Rafael de la Parra, CEO of financial technology Enso.

However, with the technological revolution, these forms of payment seem to be a thing of the past. New financial products have emerged in the world that allows you to buy a coffee, pay for a movie or make a supermarket, among other things, in an easier way and without the need to bring cash or cards in your wallet.

These are contactless payments, which include digital cards or accounts, mobile phones, and wearables, such as bracelets and watches. These operate in a very similar way to the Metro or Metrobus cards in some cities of the country, since they only approach the Point of Sale Terminal (POS) or payment recipient and without the need to make physical contact the transaction is made.

NEW TOOL

This tool operates with the help of a mobile device, such as a cell phone or tablet, through the application of the user's bank that will give access to CoDi, with a technology called QR (rapid response barcode) or NFC approximation (Near-field communication).

All individuals and businesses will be able to join CoDi, which will allow small shops, aestheticians, veterinarians, and restaurants, among other businesses, to charge for their services or the sale of their products with the help of the applications of the 32 banks that are required to use CoDi and other apps that they develop in a future Banxico or third party companies.

Among the institutions participating in the initiative are the main financial institutions in the country and the way it works is really simple. The collection operation is always initiated by the seller through a message via a mobile device with the internet, which the buyer receives, also on their mobile and, where appropriate, accepts.

There are three cases for requesting payment. For over-the-counter sales, the seller generates a message on his device by QR or NFC, which is received by the buyer, who, if he agrees, approves it and immediately notifies both parties of the closing of the operation.

For e-commerce transactions, the seller sends the collection message over the Internet to the buyer's cell phone for eventual acceptance. Service providers also send collection requests over the network. The only difference is that it will be periodic.

The requirements for using CoDi are as follows: a seller must have a mobile device with the application of one of the participating banks. In the case of e-commerce operations, the user must register through the Banco de México website, where the accounts where the resources will be received will also be verified. A buyer must have an app, an internet device, and a bank account.

TAXATION

According to the Bank of Mexico, users will be able to make quick, efficient, and secure operations, because the risks are limited to the maximum since a collection transaction must be approved by the buyer, which will avoid unrecognized charges. In addition, it will promote competition in the payment system and fight corruption by reducing the use of cash, the institution says. This tool will allow the Tax Administration Service (SAT) to have greater control of taxpayers' operations, which facilitates the collection of taxes.

THE DELAYS

Currently, at least 114 countries use contactless payments in nearly nine million businesses. These include the United States, Australia, the United Kingdom, Hong Kong, Canada, and Brazil, according to the British consulting firm Juniper Research.

Mexico joined this technology more intensively in 2018. There are advances, but Mexico is still in its infancy in this payment system and its total penetration will take between five and six years.

The biggest challenge will be to break the culture of cash use: more than half of the adult population uses their debit card five times a quarter, which reflects that they do not pay with it, but only use it to get the money.

Another challenge is the issue of connectivity. Currently, according to the Federal Institute of Telecommunications, about 500 municipalities in the country do not have access to the network.

In Mexico there are already several technological options to leave cash or cards at home, the challenge is to change the chip of the population to move towards what they call the payment system of the future. CoDi will mark a watershed in that sense and will be, perhaps, the beginning of a change in the way to pay for pet food or the dentist's office.

HOW CODI WORKS

From your smartphone

With Cobro Digital, you will be able to make transactions in seconds.

Seller:

- Generate payment request: QR/NFC or internet.

Buyer:

- In the app of your bank identifies the account and the amount.

- Accept and send instructions for the transfer.

Buyer's bank:

- Validates the transfer.

Seller/buyer:

- Receive notification of payment.

With Samsung Pay?

1. Slide up the cell phone screen in the application and select the card you will pay with.

2. Place your fingerprint on the phone reader.

3. Move the smartphone one centimeter away from the terminal.

4. If the terminal requests a security code, you will find it in the app below the selected card.

5. The transaction is validated with fingerprint, PIN, or iris scanner.

What is the QR code and how is it being used?

What is the QR code?

A QR Code is a two-dimensional square barcode that can store encoded data. Most of the time, the data is a link to a website. The QR is an acronym for Quick Response.

The QR Code was created in 1994 and adopted by the Japanese automotive industry as an electronic communication tool used in production control systems, contributing to tasks.

How does it work today?

Sometime later, the advertising media took the QR Code and made it part of big campaigns, where people were invited to read it through their cell phones, placing it in different printed materials and on web pages, use that you have seen in the advertising of several brands.

Currently, the financial system adopted the QR Code and this is changing the economy of countries like India and China, offering benefits and facilitating the tasks of transactions.

In Mexico, there are already businesses that offer this means of payment, where the buyer only has to scan the QR Code with the camera of his smartphone and in seconds a transaction is made confirming the purchase of the product.

This technology brings several benefits for the user and for the commerce that offers this form of payment:

Prevents the handling of false cash

Reduces the need to carry cash or cards

Your purchases will be easier and safer, being backed by an institution

You'll save time on your shopping

You will avoid being a victim of fraud

So you know what the QR code is and how its application has evolved for different purposes, being part of the financial market nowadays.