In the journey to improve the payments experience, sometimes the best user experience (UX) is an unnoticeable one.
Payment innovators are migrating toward making payments nearly invisible to the payer, with the goal of enabling the movement of funds so seamless and friction-free that the user is less able to identify that a transaction is even taking place.
Key to achieving this goal is data integration, yet in markets where open banking frameworks aren't as advanced as jurisdictions like the U.K., FinTechs have had to take on a leadership role to embracing an imbedded payments experience.
In Brazil, open banking regulations are in the works, but payments innovation is advancing so quickly that many in the ecosystem cannot afford to wait for the government to catch up. That led one FinTech, Zoop, to step onto the market with a FinTech- and Payments-as-a-Service business model.
A Better Payments Experience
Only a few years ago, Zoop CEO and Co-founder Fabiano Cruz told PYMNTS, Brazil's payments and banking industry was so consolidated that companies were left with few options to integrate payments and other financial capabilities within their own solutions.
"Who knows their customers better than the ones that are servicing the customers?" noted Cruz, highlighting the opportunity for non-financial companies to provide financial services and products to their own customers, rather than forcing each side to rely on an external bank or another service provider.
He pointed to one Zoop client, Brazilian food delivery startup iFood, which recently used Zoop technology to introduce its own debit card product for restaurants on its marketplace.
"No one is better positioned than these types of marketplaces and providers to develop their own financial ecosystem," added Cruz.
Making Payments Invisible
Whether a food delivery marketplace like iFood, which services both restaurants and consumers, or another type of business, there is an opportunity for non-financial companies to introduce and white label their own financial tools for customers. It was an obvious, yet unmet, need in Brazil's marketplace, according to Cruz.
But for non-financial companies to provide a positive finance experience to end-users, making payments seamless is key. For Zoop, that means white labeling a solution, which enables businesses to provide a consistent brand experience even while using a third-party platform.
It's not only for consumer payments, either, as the collaboration with iFood highlighted.
"For restaurants on iFood, if I give you a debit card, a credit card and a bank account, you don't need to go to another bank," explained Cruz, adding that there are many opportunities for B2B and B2B2C use-cases with the FinTech-as-a-Service model. "You already have everything here inside this very same solution and platform."
The journey to making payments invisible is also about providing end-users options within a single portal, including the ability to make payments via card, Brazil's new instant payments network PIX, or other rails. It's also about the seamless movement of funds, meaning businesses that offer such payment solutions can both accept funds from customers, and then apply that cash to their own B2B payment needs.
LATAM's Open Banking Journey
By ensuring that businesses offering non-financial products and services can also offer financial solutions like payments to the end-user, the experience can be far more seamless. The potential use-cases for FinTech- and Payments-as-a-Service infrastructure are vast, from white labeling payments capabilities to issuing debit cards to business users, to enabling visibility across banking providers and streamlining the movement of funds between banks.
While Brazil's open banking framework remains in progress, the as-a-Service model is rooted deeply in the concept of unlocking and interconnecting data.
As a result, it's the FinTech community that has taken the lead in driving Brazil's and Latin America's open banking journeys. Investors recently threw their weight behind this market evolution with a nearly $11 million investment in Zoop from growth accelerator Movile, which also owns iFood.
Cruz said Zoop has hundreds of application programming interfaces (APIs) to facilitate data connectivity, but a lack of standardization is holding the industry back from greater proliferation of open banking solutions. It's the traditional banks, he said, that have to get on board with an open banking reality.
"Central banks, and especially the Brazilian central bank, are pushing for this a lot," said Cruz. "The agenda is there. The timeline is there, but they need to deliver."