The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
Bizum is a payment service launched by Spanish banks in 2016 to allow users to conduct Person-to-Person (P2P) payments through a smartphone. We interviewed Fernando Rodríguez Ferrer, Head of Business Development at Bizum, to find out more about this digital initiative, which was built on the SEPA Instant Credit Transfer (SCT Inst) standard and is gaining traction in Spain.
How would you describe the Bizum solution to those unfamiliar with it? What were the main reasons behind the decision to develop such a solution in Spain?
Bizum is a mobile payment solution launched in Spain in October 2016 as the response of Spanish banks to a consumer need that was not well covered at the time.
Customers were demanding mobile payment solutions that included the following features: simplicity, safety and immediacy. The decision meant starting with P2P payments as it was a service with enough potential to be adopted by consumers on a daily basis.
Bizum was born with the objective of making easy payments between people by linking their phone numbers and email addresses with their bank accounts. People can send or request money just by typing the recipient's mobile number or by simply choosing it from their contact list. The service has strengthened the ability of our member banks to provide digital services that build a P2P community to cope with potential competition from big tech companies.
The service has not stopped innovating since then. Bizum was created to cover P2P mobile payments but has generated a new consumer habit and started adding features, such as donations to non-governmental organisations (NGOs) (2018) or e-commerce payments (2019).
Q. Could you elaborate on the link between Bizum and SCT Inst?
Bizum is built according to the SCT Inst standard. In short, it is an informational layer leveraging the new SEPA real-time payment standard. Immediacy and payment notifications in seconds are the key factors that grow customer and merchant confidence in the service. Bizum is an SCT Inst transfer with a more friendly user experience thanks to the use of the phone number as a proxy for the account of the customer.
Q. What new opportunities does Bizum open up for Spanish customers? What are the use cases for this service?
Bizum enables customers to make P2P payments from bank account to bank account in a secure, convenient and fast way just by knowing the recipient's mobile phone number. As mentioned earlier, it also allows multiple applications and payments, attaching pictures, donations to NGOs, integration with voice assistants (e.g. Siri), payments from businesses to customers, etc. And, since the end of 2019, it has also enabled e-commerce payments for more than 300 Spanish e-commerce merchants (as of 30 January 2020 ). Every use case is in compliance with the revised Payment Services Directive (PSD2).
Bizum meets the right consumer need to build a network effect and is already a popular term on the street, where "make a bizum" is the new way to refer to P2P payments. Users may transfer money to the recipient's account in less than five seconds using their banking app.
In 2020 we will see the first proximity use case for merchants based on QR code. The user will generate a dynamic QR code from the banking app, which will allow them to pay and receive money.
Our users tell us that dinners, gifts, subscriptions (Netflix, Spotify), trips and rent are the most frequent P2P cases.
What are the most significant achievements of Bizum since its launch?
The number of Bizum users has grown steadily, although the pace skyrocketed in 2019: the first million was reached by the end of 2017; there were two million users in October 2018, and by the end of 2019, Bizum had already signed up 6.25 million users. Activity is a metric that is monitored monthly: for example, in December 2019, 65 percent of Bizum users performed at least one operation and, according to the Q4 19 data, that ratio has increased to more than 80 percent of the customers.
Cash is our main competitor, and we are gaining ground because the average amount for Bizum payments has gone from 52 euros in 2017 to 46 euros in 2019. This shows that Bizum is increasingly used for the payment of smaller amounts. Talking of transactions: from 2016 to 2019 Bizum performed 80 million transactions; 60 million of these were made in 2019. Therefore, in 2020 we expect 180 million transactions.
We have achieved our goals year after year and we hope to reach 12 million “bizumers” by 2020, boosted by the new use case for online merchants. In December 2019, our customers spent one and a half million euros with the merchants who had signed up, with an average amount of 62 euros per transaction.
Would Bizum consider joining the SEPA Proxy Lookup (SPL) scheme in the near future?
Yes. There are different initiatives in Europe regarding interoperability. Bizum, as a bank-owned company, relies on the plans and prospects of its shareholders. Although our mandate is to work to deliver interoperability, the banks that own Bizum will decide the time and the way in which we widen our borders. Joining SPL also means developing partnerships with relevant solutions in Europe. These agreements or partnerships guarantee that third parties can access our database only if there are mutual arrangements in place.
What are Bizum’s views on pan-European interoperability for P2P payment solutions?
Our vision embraces the expansion of SCT Inst into the new standard underlying instrument for every kind of payment. In this sense, Bizum would need to go beyond any domestic border to be successful in a cohesive pan-European environment.
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