When they write the book on pandemic success stories, Latin America will need its own separate edition, as few regions paint the great digital shift in such dramatic contrasts.
Prior to COVID-19, Latin America as a whole was dependent on cash, internet speeds were slow and digital payments unusual. It’s a very different picture today within this region of around 660 million consumers, and merchants are adapting quickly.
In an interview with PYMNTS, Paulo Shargorodsky, vice president of Global Merchant Success at Ebanx, discussed the forces that are accelerating digital developments in the LatAm region in 2022.
“It has been a money company for a long time. Then during COVID, everyone locked themselves in their homes, “Shargorodsky said.” It forced two things. First, I think traditional banks needed to be more innovative and provide those digital payment opportunities for the population, and second, the population. she forced herself out of her comfort zone of using cash only. “
With two years to try it, people there have felt more comfortable with digital payments and “feel a little more comfortable with digital wallets,” including PIX in Brazil and Mercado Pago across the region. This goes hand in hand with the expansion of eCommerce, which gives an idea of the potential that exists in this huge market.
According to The Global Merchants’ Guide To Latin America, produced in collaboration with Ebanx, online shopping quickly caught on in the region during the pandemic. But payment preferences in Latin America vary widely from country to country. Adoption of eCommerce is on the rise, with market penetration growing in Brazil especially by the end of 2021, but many Latin Americans still prefer (or, in the case of unbanked, depend on) cash to make their digital purchases.
Get the report: The global guide of traders to Latin America
Motivated by Mobile
The driving forces behind the adoption of digital payments in LatAm are the penetration of smartphones and an increasing use of debit cards, along with alternative payment methods to digital.
Between 2020 and 2021, use of the digital wallet increased by about 40%, Shargorodsky said, and the use of debit cards increased over the same period. Smartphones have proved critical for digital expansion, as well as improving connectivity in many forms, from streaming services to retail stores digitizing their offerings. Many services that previously required a physical presence now do not, and the same goes for the purchase of basic goods and access to entertainment.
“Companies that were more solid have digitized their services due to COVID, they see a big increase in sales this way and they want to continue,” he said.
See also: eCommerce in Latin America showing hypergrowth
Sell globally, act locally
With Latin America now organizing itself into an even more connected digital marketplace, brands from consumer goods to streaming entertainment need to have the right dialects to engage. This is especially important for payments, although localization touches on other aspects.
Merchants from other geographies with designs in the huge LatAm marketplace need to partner locally if they want to take advantage of both eCommerce and regional trends in stores.
“If you’re not processing with a local provider, you’re probably using an international buyer,” he said. In doing so, you “target only by targeting a very small segment of the population that has access to international cards. Once you partner with someone like Ebanx, you offer the same payment methods that any other local supplier would be able to offer. “
Inclusion for the unbanked is a major issue for Latin America and a silver lining for the pandemic, as more unbanked are now participating in digital payments and everything they unlock.
“We have a lot more access to digital payments for, I would say, the base of the population pyramid,” Shargorodsky said. “These digital payment companies are providing the first step to financial inclusion and I think it will continue.”
See also: Peru exquisite on serving the growing digital payment needs of Latin American travelers