The transition of payment methods from physical to electronic means is one of the strongest trends of the moment. Take a look at the digitalization stages of three major Latin American markets.
Technology is evolving and taking over the means of payment. In the digital era, we have many examples around the world, from China – one of the forerunners – to Vietnam, Nigeria, USA, South Korea, Brazil and so many others.
The region in these cases are no longer a barrier, since new networks are being built and smartphones became the main device in someone’s life. A reality of Latin America, a market full of opportunities to be explored, where digital payment has been fully adopted by people, governments and companies – local and international.
According to a Statista study, Latin America has around 268 million buyers purchasing online. With digital wallets offering a secure and easy method to purchase, the region starts to move faster and faster toward this new world.
Below, we will approach the subject of innovation in digital payments by focusing on the stages of digitalization in three important Latin American markets: Argentina, Mexico, and Peru. Take a look and understand what’s the landscape for disruptive payment solutions in these countries.
When it comes to digital payment in Argentina, one of the most important initiatives is Transference 3.0, a transaction mechanism using QR codes, which allows the use of virtual wallets, either from traditional banks or fintechs, through a standardized payment interface.
This is a booming market in the country. In June 2021, about 8.5 digital transactions were carried out per person among Argentinians, either by card or transfer, a record since the beginning of the digitalization of the means of payment. With Transfer 3.0, this number tends to grow more and more.
And the news doesn’t stop there: the new Modo application comes with the objective of unifying the means of payment of the main banks in Argentina, guaranteeing operations 24 hours a day. The introduction of this new system will allow companies to receive money instantly, also automating their purchasing steps, thus reducing transaction costs and fees.
Despite the convenience of digital payments or even credit and debit cards, many people in Mexico only use good old physical cash. This is because almost 40 million people in the country do not have a bank account and do not trust such institutions. E-commerces and apps that wanted to enter this market, such as Uber, Netflix, and Amazon, had to adapt to local habits, and offer alternative payment methods, such as rechargeable accounts.
For digital wallets to become more and more popular in the country, they need to be adopted by the business side as well. There are about 10.5 million businesses in Mexico, and in the year 2020, only 3.9 million points of sale accepted digital payments.
The country’s main initiative to achieve this goal and break this cultural barrier is Cobro Digital (CoDi), a national digital payments platform that uses QR codes and NFC to allow users to make transactions through their mobile devices. Even with CoDi, the digitalization movement is still slow in Mexico compared to other countries, but numbers are optimistic: the amount moved tripled in the period of one year, going from 55.27 million pesos in April 2020 to over 146 million in April 2021.
Unlike CoDi in Mexico, an idea born based on the structure and regulation of the Central Bank, Yape emerged as a payments arm of BCP (Banco de Crédito del Perú) and at first was available only to its customers, generating convenience in payments between them.
Since then, Yape has modernized the way the Peruvian population makes payments, being the first platform of its kind in the country. This initiative has as its main objective to connect the more than 80% of Peruvians without access to a bank account, after all, they are not required to register, the only data requested are the identity number and cell phone number.
After registration, Yape provides its customer with access to a transaction account, allowing various types of digital payments. This is a unique opportunity for companies, which will be able to expand their business and reach an even larger number of potential customers, as well as reduce operating costs as a result of the digitalization of payments.
The modernization of the financial system is extremely important for the economic advancement of every country, creating a regional digital ecosystem, providing more options for people in Latin America, and breaking roadblocks that make cross-border transactions more complex.
It is a fact that digital payments are the bet of the future. A big tip for companies is: be aware of the trends and stages of digitalization in the countries you sell to and adapt to them by offering a good experience to your customers. Being one step ahead is always a great differential.
BoaCompra can be your great ally at this moment, as it has a strong presence in Latin American countries, adapting to the peculiarities of each one. So, if expanding your business is your focus, get to know our products.