Could Chile's credit card processing monopoly be coming to an end?

Digital transactional services company Multicaja believes it can challenge the monopoly of credit card administrator Transbank in Chile, following a card acquirer agreement it reached with Mastercard.

Since it launched in 2007, Multicaja has been attempting to break up Transbank's stranglehold on the credit card processing business. In 2014, it reached an interconnection agreement whereby Multicaja would act as an agent for Transbank, establishing and maintaining relationships with affiliated businesses, negotiating rates and establishing payment details. However, the deal was rejected by the local banking regulator SBIF.

The agreement announced Thursday enables Multicaja to process transactions directly from Mastercard, and may lead to similar agreements with other credit card companies such as Visa – not only for Multicaja, but also for other payment processing companies, Multicaja CEO Javier Etcheberry told BNamericas.

"This paves the way for other networks to request to be card acquirers for Mastercard; and, in the future, Visa. This is important because in Chile three quarters of transactions for the home are done with cash. Multicaja has presence nationwide in small businesses and remote areas and this means they can receive Mastercard payments," he said. Multicaja is present in 30,000 retail outlets nationwide.

Multicaja uses a point of sale device like Transbank, and can process bill payments and transfers from BCI and Santander banks. Etcheberry says Multicaja will be able to charge lower transaction fees to retailers through competitive merchant discount costs.

FUTURE OF PAYMENTS

Etcheberry said that Multicaja is interested in developing the area of mobile payments and simplifying the payment process.

He cited the example of Amazon's one-click buying technique used in Europe and the US, where the payment information needed to complete the purchase is entered previously and registered, meaning that return users only need to press the buy button.

Multicaja has also been exploring alliances to extend its reach to new consumers. In 2013, PayPal and Multicaja signed an agreement that allowed Chilean companies to accept payments from abroad. Last year, the companies extended the partnership to allow Chilean users to top off PayPal accounts with dollars by paying with pesos transferred from local checking accounts.

Etcheberry said that the partnership with Paypal is sending several million of dollars in transfers in both directions each month.

Asked about how the emergence of Fintech companies could change the future of payments, Etcheberry said, "I wouldn't talk about that as the future but rather the present. Fintech is arriving like a tsunami. People are increasingly carrying out transactions via smartphones and the web and this will change the face of retail and banking."