Plastic, NFC Wallets, QR Codes, and the Multi-Rail Conundrum in Spain

    Insights » EMEA » Plastic, NFC Wallets, QR Codes, and the Multi-Rail Conundrum in Spain

    What is an issuer to do? Traditional and fintech issuers face the strategic question of how to keep their card credentials top of wallet and how to maximize digital engagement with their customers

    Mijail Popov

    Mijail Popov

    Director – EMEA Lead – Fintech and blockchain specialist

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    Spain is witnessing a displacement of cash in favor of cards as the preferred method of payment, propelled by growing card acceptance, contactless technology, and NFC mobile wallets. Most recently, account based QR code payments have presented themselves as an additional option. Now, traditional and fintech issuers face the strategic question of how to keep their card credentials top of wallet and how to maximize digital engagement with their customers.

    NFC mobile payments, a growing trend in physical stores

    A 2023 study conducted by the fintech company Pecunpay and VISA revealed that among the favorite payment methods of Spaniards in physical stores, plastic cards (both credit and debit) rank as the first choice, selected by 55% of the respondents. In second place was cash at 25%. NFC mobile payments come in third at 18%[1]. Among NFC wallets, Apple Pay is the leader, followed by wallets by Google and Samsung and various proprietary bank wallets. These solutions primarily enable card payments: the wallet stores a digital copy of the user’s card credentials to enable mobile-based, contactless card transactions.

    Mobile phone payments are rising in popularity: the PecunPay report mentioned that 42% of Spaniards use their mobile phones to make payments (52% among 18–44-year-olds), five-percentage-point higher than in 2021, and the latest report from Sistemas de Tarjetas y Medios de Pago S.A.,[2] shows that monthly NFC mobile payment transactions increased 190% in 2022, while volume grew 61%.

    How are banks and neobanks reacting to the mobile NFC trend?

    This trend creates a conundrum for banks, who need weigh the pros and cons of enabling various payment methods and form factors. Spain is a highly banked market (98% penetration), and the average individual holds 2.5 credit and debit cards. Neobanks have also introduced new competition. German N26, with a branch in Spain since 2019, has reached a user base of 900,000 in the country, expected to surpass one million users this year. Revolut, the British neobank, which obtained its Spanish banking license in early 2022, has achieved 1.8 million users solely in Spain. These are impressive numbers considering that traditional and major banks like Santander, founded in 1857, have 13.9 million customers in Spain.

    These neobanks have an aggressive mobile-forward strategy, promoting mobile NFC. All neobanks in Spain (N26, Revolut, Bnext, Vivid, Rebellion, Wise, Monese, Nickel, Bunq, My Investor, and Qonto) have integrated Apple Pay for their cards. However, out of the total of 107 Spanish credit institutions registered with the Bank of Spain, only 44 have enabled Apple Pay, demonstrating how more traditional players are falling behind the mobile NFC trend.

    This might be because, in truth, mobile wallets have a complex relationship with banks. While they can be considered partners and enablers, they can also be competitors. Wallets serve as intermediaries between users and their bank cards, enabling linkage of cards to mobile wallets for convenient payments via smartphones. While highly attractive to users, this might lead banks to feel a loss of control over their customer relationships. However, by working with reputable and popular wallets (i.e. Apple, Google), leading banks and neobanks are helping their credentials to remain top-of-wallet among a digital-first userbase.

    Some banks, including leaders BBVA and Santander, take an aggressive approach by creating their own proprietary mobile wallet, alongside BigTech wallets. BBVA, for example, offers its dedicated wallet (BBVA Pay) and also incorporates integrations with Apple Pay, Google Wallet, and Samsung Wallet. These issuers’ strategy is to enable as many payment methods as possible for their credentials, giving customers maximum choice and convenience. Neobanks, with more constrained resources, limit themselves to third party wallets, allowing the BigTech giants to do the heavy lifting.

    Bizum, the next frontier for in-person payments?

    Apple Pay and other NFC wallets have been a boon for card payments, essentially representing a digital form factor for cards. Yet, following global trends, a new type of in-person payment is beginning to take root, in the form of QR code payments.

    Bizum is a real-time payments platform in Spain that allows users to instantly send and receive money via mobile phone. In 2016, 23 banks came together to found Bizum, leveraging Iberpay’s (Spain’s interbank clearinghouse) real-time bank transfer infrastructure. Today, 37 banks (one third of all registered credit institutions) have joined Bizum, and users must access the network through the mobile banking app of an affiliated financial institution. To send money, users enter the recipient’s mobile phone number and the amount. Once sent, if the recipient is already using Bizum, the money will be available within seconds.

    With over 24 million users (50% of the Spanish population) and two billion transactions since 2016[3], mostly P2P, Bizum has enjoyed immense success. With more than 48,000 affiliated e-commerce merchants, it has established itself as the second preferred payment method for Spaniards in online transactions (26% of online shoppers use it), following debit and credit cards (92%). Throughout 2022, Bizum registered a total of 15 million online purchases, more than double the figures of all previous years combined since its inception, showing an exponential growth year to year.

    Bizum has not yet penetrated in person payments, however, with less than 2% share of transactions in physical stores.[4] Bizum QR codes can be used to facilitate in-person purchases, obviating the need to invest in POS hardware and making it attractive for small, cost-conscious merchants. It is appealing for certain merchant segments, as they receive funds instantly and, in most cases, pay a smaller MDR than card payments, around 1% and variable by bank. But having only been launched in 2022, the functionality is still in early days, and it only accessible to merchants using payment service providers Paycomet, MONEI and Gopick.

    So far, Bizum is not actively competing with mobile wallets and card payments at traditional merchants. And, QR codes are arguably more clunky and onerous than a contactless payment. Nevertheless, considering the widespread adoption of Bizum by consumers and its popularity among e-commerce merchants, it’s feasible to imagine Bizum gaining traction in the in-person channel in the short-term.

    To what extent are banks enabling Bizum?  Here, traditional banks hold an edge over neobanks, with all the major banks integrating Bizum in their apps. However, except for N26, neobanks have not yet integrated Bizum into their applications.


    Wallets are emerging as the future of the payments landscape in Spain, as the shift towards mobile phones is steadily diminishing the prominence of plastic. Going forward, the debate will revolve around two key aspects: the ongoing rise of NFC mobile payments for card transactions and the penetration of QR code payments through Bizum. Currently, leading banks are allocating their resources to gain a foothold in various NFC mobile payment alternatives. However, it’s crucial for them to avoid squandering unnecessary resources and to meticulously track generated results and revenue.

    In contrast, neo-banks are facing the imperative to act swiftly and integrate Bizum into their apps. Failure to do so could jeopardize the progress they’ve made so far and their ability to maintain user interest. A significant challenge for neo-banks lies in resource optimization. Many are not yet profitable and therefore need to streamline costs during their scaling processes. Unlike larger banks, neobanks lack the financial backing required to be more expansive in resource allocation. Consequently, their strategic resource distribution is a more selective process.

    As for the e-commerce sector in Spain, the fourth quarter of 2022 witnessed a notable 16% year-over-year increase in revenue, amounting to €19.6 billion[1]. This trend indicates a consistent year-by-year growth in transaction volume. With Bizum’s exponential growth, banks seem to be strategically positioned to capitalize on this ongoing surge in online purchasing volume. If Bizum successfully establishes itself for QR payments, mirroring its achievement in the online realm, we might witness a success story ahead.

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    [1] Pecunpay

    [2] Spain’s unified system of payment methods

    [3] Bizum

    [4] Pecunpay and Visa, 2023.

    [5] CNMC Data

    Mijail Popov
    Mijail Popov

    Mijail Popov is a Senior Analyst at PCMI, with nearly a decade of experience advising financial institutions, fintech companies, and startups on regulatory, business, and market insights.