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FINANCE

Bizum: Why you probably need this free payment app for life in Spain

With 12 million users in Spain, this mobile payment service is how many Spaniards choose to split the bill, pay over small amounts for services and even pay the rent. Here's how it works, what changes in 2021 and why you probably need it.

bizum spain
Photo: StockSnap /Pixabay

What is Bizum?

Bizum is a Spanish mobile service that allows users to send an amount of money that usually ranges between 50 cents and €500 per operation, just by knowing the recipient’s phone number,

It’s a free app service which was launched by Spain’s main banks in 2016 as a way of competing with other mobile payment services such as Apple Pay, Google Pay, Samsung Pay, Paypal and others.

Why do Spaniards like using Bizum so much?

One of Bizum’s main advantages is that the sender doesn’t have to type out the long IBAN and other account details that come with regular money transfers.

There’s also the fact that the recipient receives the money immediately for free, whereas other immediate banking transfers often come with a price tag. 

It’s also possible to request money from another person through Bizum. 

Nowadays if you meet up with Spanish friends and it comes to splitting the bill, you’ll likely hear from at least one person, ¿Tienes Bizum? (Do you have Bizum?). 

Others use it for regular payments, even to pay their rent or services such as Nexflix and Spotify.

It’s fast, easy, free and according to a 2020 study by Caixabank Research, Bizum proved particularly useful during Spain’s Covid-19 lockdowns when going out to withdraw money from an ATM wasn’t always an option. 

Bizum is particularly popular among Spaniards aged 25 to 44, who make up 48 percent of users.

Many businesses and shops in Spain are now also allowing customers to pay through Bizum, so if you forget your wallet with your cards and cash in it, there’s the possibility of paying immediately through your mobile. 

All in all, Bizum is the go-to mobile payment service in Spain with more than 12 million users, so if you’re based in Spain it will probably come in handy for you to have it activated too.

Otherwise, your Spanish friends and acquaintances may be put off by the fact that they can’t give you the exact amount in cash, that they have to go to the ATM to withdraw money or that they have to spend time doing a stand bank transfer which may even cost them extra.

How is Bizum used?

Bizum does not work as an independent application, so to register you must do so through your mobile banking app. It may be possible through the mobile banking app you have already or through a separate app your bank offers for quick mobile payments. 

When you access Bizum, you’ll have to sign in to your banking app with your usual details and once in, you’ll have to choose which account you want to link the Bizum service to (you can only have one associated account, although this can be changed).

Next up you’ll need to select the person you’re sending money to from your mobile’s contact list or manually enter their phone number, type the amount to send and finally confirm the transaction by means of a code you’ll get via SMS. 

If the recipient has Bizum, the money appears in their account in just five seconds. If not, they will be prompted to sign up as it is necessary for the receiver of the money to have Bizum.

Bizum will let the sender know before the transaction occurs whether the recipient has Bizum.

If you want to request money instead of sending it, you also have to add the contact, the amount and the payment description. You then confirm the request and validate the operation with the code that you’ll get via SMS.

What changes about Bizum in 2021?

As of June 15th 2021,  the number of Bizum payments that you can receive has been reduced to 60 per month, compared to the 150 payments that were allowed up until now.

This will no doubt only affect very regular users.

The new rule only affects payments between individuals – companies will not be affected.

Why is Bizum reducing the number of payments per month?

“After more than four years of service, we adjusted the operation to the reality of what was being used. Only 0.07 percent of users received more than 60 bizums per month,”  Bizum’s Director of Business Development, Fernando Rodríguez is quoted as saying in 20 Minutos.

In fact, most recipients of bizums receive an average of 4.3 operations per month. “This is very far from the limit of the 60 that we have fixed,” emphasised Rodríguez.

Another reason that Bizum is reducing the number of payments is due to security issues. “By reducing the limit of operations received, it is more difficult to use Bizum to receive funds improperly,” Rodríguez told 20 Minutos. This means that fewer `under the table’ payments can be made.

It is important to note that this measure affects only the number of bizums that a user can receive. Anyone can continue to send as many bizums as they want per month.

The rest of the conditions remain as before: the amount allowed for each operation is between €0.5 and €500 (some banks allow higher payments up to €1,000), you cannot receive more than €2,000 per day and, at most, 30 recipients can be included in a joint payment. However, banks can add extra limits, so if in doubt you should check with your bank.

The future of Bizum 

Currently, more than twenty banks in Spain include Bizum payments as an option among their services and it has almost tripled its users in just two years, going from six million in 2019 to 15 million this year. 

By the end of 2021, Bizum hopes to have reached 20 million users and have 18,000 online businesses that accept it.

READ ALSO:

Readers reveal: The best smartphone apps for life in Spain

Member comments

  1. A friend recently received an urgent request from her boss for a payment of €500 via bizum. She tried to ring her without success and ended up sending the money. It was a scam. Her boss’s phone had been hacked. She lost the money as neither bizum nor the bank would refund her.

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MONEY

Rampant branch closures and job cuts help Spain’s banks post huge earnings

Spain’s biggest banks this week reported huge profits in 2021 and cheered their return to recovery post-Covid, but ruthless cost-cutting in the form of thousands of layoffs, hundreds of branch closures and the removal of many ATMs have left customers in Spain suffering, in this latest example of ‘Capitalismo 2.0’. 

A man withdraws cash from a Santander branch in Madrid.
More than 3,500 Santander workers lost their jobs in Spain in 2021 and a further 2,000 more employees working for Santander across Europe were also laid off. Photo: PHILIPPE DESMAZES / AFP

Spanish banking giant Santander on Wednesday said it has bounced back from the pandemic as it returned to profit last year, beating analyst expectations and exceeding its pre-COVID earnings.

Likewise, Spain’s second-largest bank BBVA said on Thursday that it saw a strong rebound in 2021 following the Covid crisis, tripling its net profits thanks to a recovery in business activity.

It’s a similar story for Unicaja (€137 million profit in 2021), Caixabank (€5.2 billion profit thanks to merge with Bankia), Sabadell (€530 million profit last year), Abanca (€323 million profit) and all of Spain’s other main banks.

This may be promising news for Spain’s banking sector, but their profits have come at a cost for many of their employees and customers. 

In 2021, 19,000 bank employees lost their jobs, almost all through state-approved ERE layoffs, meant for companies struggling financially.

BBVA employees protest against layoffs in May 2021 in Madrid. Spain’s second-largest bank BBVA is looking to shed 3,800 jobs, affecting 16 percent of its staff, in a move denounced by unions as “scandalous”. (Photo by GABRIEL BOUYS / AFP)

Around 11 percent of bank branches in Spain have also been closed down in 2021 as part of Spanish banks’ attempts to cut costs, even though they’ve agreed to pay just under €5 billion in compensation.

Rampant branch closures have in turn resulted in 2,200 ATMs being removed since the Covid-19 pandemic began, even though the use of cajeros automáticos went up by 20 percent in 2021.

There are now 48,300 ATMs in Spain, levels not seen since 2001.

READ MORE:

Apart from losses caused by the coronavirus crisis, Spain’s financial institutions have justified the lay-offs, branch closures and ATM removals under the premise that there was already a shift to online banking taking place among customers. 

But the problem has been around for longer in a country with stark population differences between the cities and so-called ‘Empty Spain’, with rural communities and elderly people bearing the brunt of it. 

 

Caixabank laid off almost 6,500 workers in the first sixth months of 2021. Photo: ANDER GILLENEA/AFP

Just this month, a 78-year-old Valencian man has than collected 400,000+ signatures in an online petition calling for Spanish banks to offer face-to-face customer service that’s “humane” to elderly people, spurring the Bank of Spain and even Spain’s Prime Minister Pedro Sánchez to publicly say they would address the problem.

READ MORE: ‘I’m old, not stupid’ – How one Spanish senior is demanding face-to-face bank service

It’s worth noting that between 2008 and 2019, Spain had the highest number of branch closures and bank job cuts in Europe, with 48 percent of its branches shuttered compared with a bloc-wide average of 31 percent.

Below is more detailed information on how Santander and BBVA, Spain’s two biggest banks, have reported their huge profits in 2021.

Santander

Driven by a strong performance in the United States and Britain, the bank booked a net profit of €8.1 billion in 2021, close to a 12-year high. 

It was a huge improvement from 2020 when the pandemic hit and the bank suffered a net loss of €8.7 billion after it was forced to write down the value of several of its branches, particularly in the UK. It was also higher than 2019, when the bank posted a net profit of €6.5 billion.

Analysts from FactSet were expecting profits of €7.9 billion. 

“Our 2021 results demonstrate once again the value of our scale and presence across both developed and developing markets, with attributable profit 25 per cent higher than pre-COVID levels in 2019,” said chief executive Ana Botin in a statement.

Net banking income, the equivalent to turnover, also increased, reaching €33.4 billion, compared to €31.9 billion in 2020. This dynamic was made possible by a strong increase in customer numbers, with the group now counting almost 153 million customers worldwide. 

“We have added five million new customers in the last 12 months alone,” said Botin.

Santander performed particularly well in Europe and North America, with profits doubling in constant euros compared to 2020. In the UK, where Santander has a strong presence, current profit even “quadrupled” over the same period to €1.6 billion.

Last year’s net loss was the first in Banco Santander’s history, after having to revise downwards the value of several of its subsidiaries, notably in the UK, because of COVID.

The banking giant, which cut nearly 3,500 jobs at the end of 2020, in September announced an interim shareholder payout of €1.7 billion for its 2021 results. “In the coming weeks, we will announce additional compensation linked to the 2021 results,” it said.

BBVA

The group, which mainly operates in Spain but also in Latin America, Mexico and Turkey, posted profits of €4.65 billion ($5.25 billion), up from €1.3 billion a year earlier.

The result, which followed a solid fourth quarter with profits of €1.34 billion, was higher than expected, with FactSet analysts expecting a figure of €4.32 billion .

Excluding non-recurring items, such as the outcome of a restructuring plan launched last year, it generated profits of 5.07 billion euros in what was the highest figure “in 10 years”, the bank said in a statement.

In 2020, the Spanish bank saw its net profit tumble 63 percent as a result of asset depreciation and provisions taken against an increase in bad loans due to the economic fallout of the virus crisis.

“The economic recovery over the past year has brought with it a marked upturn in banking activity, mainly in the loan portfolio,” the bank explained, pointing to a reduction of the provisions put in place because of Covid.

In 2021, BBVA added a “record” 8.7 million new customers, largely due to the growth of its online activities. It now has 81.7 million customers worldwide.

The group’s net interest margins also rose 6.1 percent year-on-year to €14.7 billion, said the bank, which is undergoing a cost-cutting drive.

So far, it has axed 2,935 jobs and closed down 480 branches as the banking sector undergoes increasing digitalisation and fewer and fewer transactions are carried out over the counter.

At the end of 2020, BBVA sold its US unit to PNC Financial Services for nearly 10 billion euros and decided to reinvest some of the funds in the Turkish market.

In November, it launched a bid to take full control of its Turkish lending subsidiary Garanti, offering €2.25 billion ($2.6 billion) to buy the 50.15 percent stake it does not yet own.

The deal should be finalised in the first quarter of 2022.

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