That a market is massive and emerging as a target for digitization, does not necessary mean it will be an easy target to pursue — a lesson learned the hard way by Facebook in June when regulators hit the pause button on its adding payment capabilities to WhatsApp in Brazil.
Negotiations between Facebook and regulators seem to have stalled on the question of whether or not Facebook actually needs a license to operate in Brazil. It’s a stalemate, Movile CEO Patrick Hruby told Karen Webster, that can likely be broken if Facebook agrees to integrate its service with the central bank-backed instant payments platform PIX, slated for rollout in October.
“In the event WhatsApp does become interoperable with this PIX technology, I would venture that [reguators] might be more [open] to it,” Hruby noted.
Brazilian regulators, he noted, don't want the digital payments market dominated by closed-loop systems the way China’s is, and while Facebook saw the opportunity in the market, they failed to understand the Central Bank of Brazil’s preferences around how that suddenly exploding market will develop.
It’s an almost understandable oversight, Hruby noted, given how quickly Brazil and the Latin American market as a whole is developing toward digital in the aftermath of the global pandemic. It’s development that Movile has a front row seat for as a Brazil-based holding company that’s developed, as well as invested in, a host of Latin America tech-based startups in an attempt to build a regional digital ecosystem and a mobile commerce platform.
The changes that are happening in Brazil and across the region, he noted, aren’t exactly new. The trends Movile has seen growing and accelerating in the last several months were all things the company believed were going to happen. So, the company focused its efforts around building an ecosystem of digital technology companies to make the transition to digital happen more seamlessly and smoothly for consumers and businesses.
“It's just all of a sudden happening a lot faster,” Hruby noted, a reality that has both created challenges and opportunities for innovation throughout the entire ecosystem Movile is working to construct — both for the ecosystem emerging today — and the one the company believes will exist on the other side of the current disruptions tomorrow.
Leveraging an Ecosystem to Ride Out Uncertainty
The Movile ecosystem at present is made up of several independent but loosely connected and mutually supportive firms: iFood, MovilePay, PlayKids, Sympla, Wavy and Zoop. The goal, he noted, is to build them out as independent companies that are standalone and capable of surviving and thriving as independent businesses.
But, he noted, the fact that they all exist within an interconnected ecosystem adds to their collective ability to do so, particularly in unusual times such as these when the impacts of the global shift have been rather unevenly felt among them. The food delivery platform iFood and the “Netflix for kids’ content” Play Kids platform, for example, both got a massive overnight boost. The company’s self-serve ticketing platform Sympla on the other hand was hit hard as the physical events it sold tickets for were shut down by the pandemic, and the platform was forced to pivot to offering new types of digital events to meet the changing needs of both consumers and businesses.
“We’re seeing event producers that used to do only events offline really migrating quickly to do events online,” Hruby said, especially when it comes to education and corporate events.
“That's really the segment within the whole ecosystem that we've seen a lot of traction, and because of Movile being an ecosystem, we've been able to shield them and help them go through this period without any layoffs,” he added.
And, he noted, investing in the transition has been the theme of the last several months for the six businesses — and counting — that make up the Movile ecosystem as consumers have rapidly re-oriented their lives around digital services, and firms have rushed to capture that opportunity and make it more accessible to a wider swatch of consumers. Brazil alone, he noted, has 45 million unbanked customers, and the wave of new technologies and digital wallets can provide them with the onramp solution they need that is both cost effective and business creating.
The combined uses of Zoop and Mobile Pay, he said, makes it possible for consumers to bypass the traditional point of sale (POS) and touchpad, scan a QR code and pay “using whatever method they chose” in the background. It also makes it possible for businesses that use it (currently restaurants) to access “basically a digital account for the restaurant and where they can receive the money that they get from iFood and don’t have to wait the 30 days they normally would to be paid by their credit card receivables.”
“It’s not at full scale yet,” Hruby said. “We're still building that up. And it's built mostly on top of Zoop’s technology that allows other companies to offer financial services because they do all the compliance, the central bank regulations, and all of the KYC [know your customer] that needs to happen. They have all the rails, they have all the deals, and they allow other companies to offer financial services to their customers.”
What Comes Next?
In what has become an increasingly common reply, Hruby noted that predicting exactly what happens next is beyond his ability given how much of the world remains in a state of transition. What he said he does know is that the world will likely never reset to exactly what it was before the pandemic, and the full scale of total digitization will likely dial back some as the pandemic period ends.
What Hruby is seeing thus far in Brazil and Latin America is that it is increasingly likely that the digital shift will continue.
“All of a sudden people are going to say, ‘Oh, this part I actually liked,’” Hruby said, and they will start working from home more and ordering their groceries for delivery more because they will see that it both works and makes their lives easier.
“There is definitely a chance to push the trend for all who are interested,” he said. “Digital has been accelerated during this period. There are more opportunities for eCommerce and more online payments. This is definitely happening. So, I think we've reached a new level that will keep rising for some time as no one knows exactly when this cycle is going to end.”
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