Itaú Unibanco, Brazil’s largest commercial
bank, has partnered with Brazil’s leading telecoms firm Vivo to
launch both a new credit card and a mobile payments system.
Dan Jones
spoke to Carlos Zanvettor, director of credit cards at Itaú
Unibanco, about the project and the benefits the bank expects from
the innovations.
Brazil’s Itaú Unibanco, formed from the merger of Banco Itaú and
Unibanco in late 2008, believes a strategic card partnership with
telecoms group Vivo will enable it to forge ahead in the country’s
emerging m-payments segment, a channel which it sees as encouraging
customer loyalty as well as payment volumes. 
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The initial agreement will see the two firms
launch the Vivo Itaucard, a product designed to provide benefits to
prepaid and post-pay mobile users every time they use the card.
Using the card to top-up mobile phone credit by BRL35 ($19) or more
will result in the bank matching the top-up with an equivalent
amount, while card purchases made by phone users amass points to be
redeemed against the cost of a new handset.
Speaking to RBI, Carlos Zanvettor,
director of cards at Itaú Unibanco, was eager to emphasis the other
benefits of the partnership. Zanvettor said that the bank’s tie-up
with Vivo signalled its intentions to build up a critical mass
within the nascent Brazilian mobile payments sector, with Itaú
using a micro-regional strategy focusing on high-income consumers
in the country’s two largest cities, Rio de Janeiro and Sao Paolo,
with a view to ultimately establishing market leadership in the
sector.
“We want to position ourselves to lead this
market as it grows. Hopefully, in five to 10 years when mobile
corresponds to a relevant share of transactions, we will find our
joint venture leading the market,” said Zanvettor.
The joint venture route is seen by Zanvettor
as crucial to the success of the initiative. Other Brazilian mobile
payments programmes, such as the ‘Oi Paggo’ vertical solution
launched by telecoms firm Oi, have struggled due to an absence of
sufficient interest from either merchants or consumers.
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By GlobalDataWithin the financial services industry itself,
meanwhile, pilot initiatives have similarly not yet achieved enough
scale to warrant a comprehensive rollout.
In the words of Zanvettor, “there is, in the
first instance, a ‘consumer habit challenge’ to face”.
50 million card portfolio
Itaú, with 50 million cards in its
credit card portfolio, and Vivo, with a customer base of over 50
million, will target consumers who are already customers of both
companies in an attempt to overcome this hurdle and reach critical
mass.
“We have strong franchises in both industries.
We thought this would make it a lot easier to explain to mutual
customers of both companies what they need to do to take advantage
of mobile payments,” Zanvettor said.
Other challenges remain. The initial take-up
of m-payments products has not been uniform, for instance. Itaú has
observed a lack of customer willingness to use their phones for
payments in supermarkets, for instance – in spite of the fact that
such retailers were considered to be ideal situations in which to
use such technology.
By contrast, the convenience of m-payments
plays well in locations such as gas stations, where customers no
longer have to leave their vehicle in order to pay for their fuel,
and means that people typically adopt the service after a single
usage, according to Zanvettor.
“We’ve been observing all these situations.
The next step will be to position our offering to exactly target
the situation where the consumer is responding better because it’s
easier, safer and faster for them.”
Nonetheless, Itaú’s long-term strategy remains
ambitious. Of the selected customers it intends to target, it
expects a 30 percent activation rate, a figure which would
stabilise the platform and, the bank envisages, ultimately lead to
at least 10 percent of credit line usage being routed through
mobile payments.
The bank is also looking at leveraging another
key element of its cards strategy, its sponsorship of Brazilian
football and the World Cup tournament due to be held in the country
in 2014 (see RBI 611). Itaú already offers customers a 50
percent discount on match day tickets for customers paying via
credit card and envisages that cards could replace tickets
themselves by 2014.
But this evolution could progress a stage
further, with mobile payments replacing credit cards in sporting
stadiums across the country should the platform achieve sufficient
scale.
Zanvettor concluded: “For now, we’re focusing
on convenience. We didn’t price the transactions as being more or
less profitable than a regular transaction, and we’re subsidising
the cost of transporting the data to enable the transaction so we
don’t charge customers anything, and for that we expect to get back
additional loyalty and volumes.”
