Global Courant
A central bank decision changing the mechanisms for transferring funds from banks to digital wallets sparked an angry reaction at Mercado Pago. It happens that the new regulations, which come into force on December 1st, will require users to confirm their identity only once to make transfers from a CBU (bank account) to a CVU (fintech account), “in order to do so “To prevent fraud,” the BCRA said.
What the company led by Miguel Pesce aims to do is to limit the use of Debin (instant direct debit) only for cash payments and not for money transfers between accounts, which from December “will be done through the ‘Pull Immediate Transfers’ system.” According to the BCRA, “change “These changes will in no way affect users’ ability to manage their funds between different financial product providers.”
From Mercado Pago they accuse banks of driving change and that “4 million people will be affected by the shutdown of Immediate Debit, the tool that our users use every day to deposit their own money into their digital account.” The Fintech Company Mercado Libre believes this is a maneuver to hinder the transfer of funds to its platform, which offers depositors a return of “94% per year (average of the last few days)”.
Mercado Pago’s business architecture is based on an investment fund managed by Bind. Its popularity lies in the fact that it offers its customers variable daily returns, unlike a traditional savings account or checking account. All money can also be removed from the wallet at any time. Or transfer it with Debin so far. That is, by simply entering the recipient’s CBU or CVU.
The central bank argues that this facility also encourages fraud and for this reason requires that all companies (banks and fintechs) implement immediate pull transfers. The headquarters emphasized that this change has been agreed with the entire financial sector and that the purpose of the change is to “provide better security standards to the system.”
“The banks have managed to get the BCRA to replace this tool with another one that creates more friction for the user,” they said from Mercado Pago, before emphasizing that Immediate Pull Transfers “still have shortcomings and do not serve as a replacement. Instantly.” Direct debit is the safest payment method available and has the lowest fraud rate ever recorded in the country.
“The announced measure is a new direct attack on financial inclusion that will negatively impact the experience of millions of users and lead to the use of cash,” protested the unicorn’s financial business unit, founded by Marcos Galperin. In fact, as of the new decision, all fintech companies will have to adapt to the regulations that will change the way money is transferred between traditional and electronic accounts. Some of them, like Ualá, were already working with pull immediate transfers.
The change in regulations brings about a fundamental change in how money is transferred between accounts. Pull Immediate Transfers requires users to complete a one-time validation to link a bank account to a digital account. Before doing so, the person must enter the company’s home banking, enter their password and confirm their identity using a procedure (the pull) that varies depending on the bank: it can be a token, an SMS or a biometric test. You can then act freely as often as you like.
It may be annoying, but at headquarters they say that this system is the most widespread in the world because it is the safest. And that Debin was actually designed to make electronic payments, not to transfer money. “Mercado Pago has always been legal and we trust that it will continue to be so,” the company warned.
Mercado Pago denounced that replacing Debin with Immediate Pull Transfers is a complaint from traditional banks that are unable to keep deposits in their demand accounts compared to a better option. They say that on average, each user deposits money into their digital account eight times a month. “Immediate Debit is a system that was used to deposit money in Mercado Pago almost three years ago and has become the financing channel most valued by people due to its simplicity and security,” they noted.
And that the new system is a new attempt to harm them. “In our testing, 9 out of 10 people are unable to deposit money from the digital wallet into their account, causing inconvenience as users are forced to go through multiple steps in their home banking – even going to an ATM to operate.” , they concluded
