More than 30 years ago, it was unthinkable to make immediate payments through a digital bank card or a mobile application. Today in Latin America, following the already mature European market, digital wallets have become popular rapidly, reaching 21% usage in 2022. Globally, this figure is expected to grow to five billion users by 2026, consolidating its relevance in the market and offering new opportunities for financial services.
According to the FIS report on the future of payments in Latin America, this sector is undergoing key transformations: mobile payments have gained relevance due to their ease and speed. It is projected that, over the next two years, mobile ” B2B payments“(direct business-to-business transactions) will increase their use from 15% to 21%, while mobile wallets will increase their adoption from 21% to 28%, reaffirming themselves as the preferred options for users. mobile wallets will increase their adoption from 21% to 28%, reaffirming themselves as preferred options for users.
Platforms such as Apple Pay y Google Pay are transforming the way people manage their finances, enabling secure transactions via smartphones or smartwatches without the need for a physical wallet, and both services use near field communication (NFC) technology to operate. This means that, by bringing the device close to a contactless payment terminal, the transaction is completed quickly, easily and securely, as the article on digital banking of BBVA.
The newspaper La República highlights that the main difference between a means of payment and a digital wallet lies in the functionalities they offer. While a payment method is designed solely for making transactions, a digital wallet offers more options for managing money. In addition to payments, it allows the management of decentralized digital assets such as cryptocurrencies, membership card management, event or airline tickets, facilitating a more complete management of funds, identities and financial assets.
App and digital wallet with a digital bank card
In Colombia, 98% of municipalities have registered users in one of the more than 10 digital wallets available, surpassing the coverage of traditional banking channels, according to data from Colombia Fintech.
A practical way to transform a banking app into a digital wallet is by incorporating a digital card digital card bank credit or debit card that offers advanced security through tokenization. This technology provides greater protection for transactions, allowing users to pay in physical stores and online with confidence. Unlike using a physical card, tokenization ensures more secure transactions, which is ideal for e-commerce purchases, whether on sites that accept franchised or private cards.
By integrating a digital wallet with a tokenized digital bank card, whether credit or debit, institutions can offer a secure and outstanding payment experience, essential to compete in the region’s dynamic market.
A digital wallet offers multiple functions to manage money virtually, while a means of payment is more limited and has a specific purpose.
Digital card and tokenization
Technological advances in the financial sector are also accompanied by new threats, such as data theft, fraud and identity theft. This represents a major challenge for both users and banks, which have made security a top priority.
Tokenization in digital banking cards consists of replacing the sensitive data of the card with a unique code or “token”, used for secure transactions without revealing the original information, which reduces the risk of fraud, meaning that the card can be used for the following reasons:
- Ensures that sensitive customer data, such as credit card or account numbers, are not visible during the transaction.
- Instead of displaying the actual data, a symbolic representation known as a “token” is generated – in more popular parlance we can treat it as an “alias” of the payment information.
- Credit and debit card data are transformed into randomly generated alphanumeric characters.
- The original information is not exposed, making it impossible to identify.
- The encryption used to protect this data is unbreakable, minimizing the risk of vulnerability.
Avoid identity theft fraud
The Colombian news portal, Semana points out that in digital consumer trends in cybersecurity, preferences are oriented towards invisible security: 81% prefer fingerprint biometrics, 77% opt for security codes sent to the mobile and 76% rely on behavioral biometrics, which creates a unique profile to validate each user.
To prevent fraud, it is key to adopt processes such as digital onboarding, identity verification and authentication, designed to ensure fast, secure and compliant onboarding.
This process, which guarantees maximum security, begins with the user’s registration in the financial institution’s app or portal, where he/she provides his/her personal data and accepts the terms. Next, an identity verification is performed through a morphological capture of the identity document and facial biometrics (passive or active), and the verification of data in official databases to prevent fraud.
Once approved, the digital bank card is issued for activation, using biometrics. Finally, the customer receives a welcome notification with security recommendations for proper use of the digital bank card.
Offering a digital bank card with tokenization, which is issued and activated from the bank’s app or from the customer’s public wallet, gives users the ability to make transactions and purchases securely from their cell phone. This creates a complete digital and omnichannel experience, putting financial institutions at the forefront of the industry.