“Botón PSE has changed the payment landscape in Colombia”

In 2015, The Better Than Cash Alliance published a case study on Colombia’s digital payment platform, Secure Online Payments (PSE) [1], better known as “Botón PSE.”

The platform was developed by the banking sector and a private clearing house, ACH Colombia. Users pay for goods and services online, transacting directly from and to bank accounts. The platform is convenient and user friendly, particularly when compared to cash payments. The introduction of Botón PSE to the Colombian market was a welcome addition to the payments ecosystem and has complemented existing payments offerings in the country.

In the early years of Botón PSE, government policies played an instrumental role in driving usage. In just four years, the number of transactions has more than tripled. According to KPMG, 44 million e-commerce transactions were completed in 2017 in Colombia, which is expected to be one of the world’s fastest growing countries for e-commerce. In the same year, Botón PSE had 52 million transactions.

The platform demonstrates how public-private collaboration can be successful in providing payment solutions. The remarkable results from Colombia are driving providers throughout the region to visit and learn from the experience.

We spoke with Gustavo Vega, president of ACH Colombia, to understand the key success factors of Botón PSE.

How did Botón PSE perform in the last four years? Did you expect such good results?

There is no doubt that the growth has been incredible! The platform offers a convenient solution to a tangible problem – making online payments safe and easy to use.

We realized that Colombians were getting used to online transactions, and that companies were looking to take advantage of the opportunities offered by innovative online business models and new technologies. This is where we came in!

The figures show that we are successfully fulfilling a particular niche in the market. The number of annual transactions processed through Botón PSE has increased by 30% each year since 2013. In 2017, Botón PSE handled over 52 million transactions – that’s 32% more than in 2016. At the end of September 2018, the number of total transactions had increased by 39% compared to the previous year.

Processed values have also grown at an average rate of 30% per year. The average number of transactions has remained relatively stable. In 2017, the average transaction value amounted to COP$2,456.

Growth

What were the reasons behind this growth?

Botón PSE has evolved and has progressively strengthened its position in the market by expanding and diversifying its client base.

A key success factor was that we were able to ride the wave of Gobierno en Línea and the digitization of public services. The digitization drive showed some very valuable ways that Boton PSE can be used. For example, companies with more than seven employees and independent workers are required to pay social security contributions through digital means. In our early years, the government’s Social Security was an essential driver of PSE growth. It represented a significant share of the number and value of the transactions processed by Botón PSE. This made Social Security a critical client, since it allowed the solution to reach a significant amount of people. However, now we have many other clients.

Today, over 9,000 companies rely on Botón PSE for payments, compared to almost 7,000 in 2016, an increase of 34%.

E-payment gateways have become a very important driver of transactions, representing 18% of transactions, followed by Social Security (17%), as well as other government payments, utilities and cable TV.

Therefore, the diversification of clients, sectors and ways of using e-transactions (online payments, social security, payroll and public services) have strengthened Botón PSE, making its growth more dynamic.

Many countries in the region are interested in learning from the success of Botón PSE. In your opinion, what are the most important lessons for anyone who may be interested in a similar enterprise?

• Obtain support from all banks and develop application programming interfaces (APIs). Botón PSE allows transactions directly from the user’s bank account. Therefore, it’s very important to ensure the participation of all banks, or at least most of them. Without this, it becomes difficult for a similar initiative to grow as much as Botón PSE has.
• Stability is crucial. The platform must be safe and reliable. The system should work 100% of the time. Otherwise, there is a risk of losing clients’ trust, which could jeopardize the viability of the platform. For this reason, we constantly perform resilience tests to ensure that Botón PSE is as safe as possible.
• Incentives must be aligned between stakeholders and any opportunities should be seized. The launch of Botón PSE benefited from the government’s push toward greater connectivity throughout the country and the drive of Gobierno en Línea, which sought to digitize government services. Botón PSE was able to capitalize on the growing internet user base and became a facilitator of the digitization of government services. Selecting a highly valuable way of using e-transactions such as Social Security payments allowed us to reach scale quickly.
• Security generates confidence in its use. In studies that we carried out last year, PSE users had viewed this payment system favorably. They found it easy to use, with many noting that the best feature was its security. In other words, they felt safe paying through Botón PSE, which is why they would recommend it.

[1] Botón PSE is an online payment service developed by ACH Colombia to enable private and public organizations to accept payments online. The service is linked to the user’s online banking, and funds are directly debited from their savings or checking accounts.