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Latin American consumers are increasingly choosing alternative options when making payments.according to new research by Fintech in Brazil Ebanks.
A study entitled “”Beyond borders 2022/2023We delve into the latest payment trends emerging from the region and how these trends are changing the landscape of digital commerce.
According to the survey results, by the end of 2022, APM now holds a 39% share of total digital commerce volume. The value of this stock is described in studies as being worth around $400 billion.
The study also notes that while APM has risen, credit and debit card usage has continued to decline over the past four years.
As the data shows, the three Latin American countries using APM the most for digital commerce are Colombia, El Salvador, and Brazil. In these countries, APM peaked at 50%, 49% and 44% respectively.
The rise in APM in the region can be strongly attributed to increasing digitalization and financial inclusion.
Therefore, between 2011 and 2021, the proportion of Latin Americans will be in a bank account Jumped from 39% to 73%. However, only 28% have a credit card. It is in the gap between these two statistics that APM finds a unique opportunity.
The burgeoning alternative payments landscape in Latin America is shaped by increased diversity and availability. This is evident in account-based transfers such as Pix in Brazil and his PSE in Colombia. E-wallets such as Ual in Argentina. Cash-based payments such as his OXXO in Mexico. Buy now (BNPL) solutions such as Sistecredito in Colombia.
One of the most popular APMs in digital commerce in the region, account-based money transfer has proven to be a true success story.
Hence the latest analysis from Americas market intelligence (AMI) shows that these transfers have nearly doubled over the last five years and are growing at a CAGR of 86% since 2018.
Latin American remittances are expected to exceed $68 billion by the end of this year. Colombia is expected to hold the largest share with her 30% of total digital commerce volume. Brazil follows Colombia with 24% of her, Guatemala with 11% of her, Chile and Bolivia with 10% each. And by 2025, total account-based remittance payouts are projected to reach $121 billion.
Two major players have been identified in the growing momentum of LatAm’s account-based remittances. That includes Pix from Brazil and his PSE from Colombia.
Developed by Central Bank of Brazil, Pix accounted for about one-fifth of all online purchases made in Brazil this year. APM is used as a global benchmark for other regions looking for fast, secure, reliable and instant transactions.
Meanwhile, PSE will be the most used payment method in Colombia’s e-commerce sector in 2021, accounting for nearly 35% of all online purchases in the country. PSE is better than credit cards with 30% share. In 2022, instant payments made by the Colombian Clearinghouse should reach $9.3 billion in total online sales.
Other smaller account-based remittance solutions are starting to gain momentum in the Latin American e-commerce environment. These include SPEI in Mexico, Sinpe Mvil in Costa Rica, Simple in Bolivia and Pagos al Instante in the Dominican Republic.
Another APM that relies on real-time confirmations that is becoming increasingly popular in digital commerce in Latin America is e-wallets. Across the region’s digital commerce landscape, usage is expected to grow by approximately 20% annually through 2025.
This growth is most notably driven by increasing demand for digital services in Latin America. AMI expects e-wallet payments to surpass his $70 billion in the same period, with a roughly 10% share of the total Latin American digital commerce market.
Argentina and El Salvador currently lead the way in penetration, with a 23% share of their respective digital commerce markets being paid with e-wallets. It is followed by neighboring countries Bolivia (14%), Peru (13%) and Uruguay (12%).
Similarly, Brazil and Mexico appear to be the least responsive to e-wallets at 11% and 8% respectively.
The rapid growth of these APMs with real-time confirmations is driven by changing consumer behavior. Shoppers have come to expect instant payments and their preferences remain the same.
“At this point, I can’t think of a way to pay without an instant mindset,” he commented. Julianna EtchberryDirector of Strategic Payment Partnerships at EBANX.
Customers expect payment options to match their instant lifestyle. They want to be able to send and receive money instantly. in seconds.
We are drawn to the immediate resolution of our needs, concludes Etcheverry.
EBANX research shows that another APM gaining momentum in Latin America is BNPL.
This certainly follows a global trend that predicts that payments of this kind could reach $400 billion worldwide by 2026.
Evidence continues to show that APM continues to gain momentum in Latin America. In her two largest economies in Latin America, Brazil and Mexico, BNPL grew by 80% and 82% respectively in his 2022. But neither could top the 208% increase in her BNPL services in Colombia.
Mexico and Colombia have the largest BNPL shares in Latin America. For online commerce volume, he achieved $1.2 billion and $1.1 billion respectively. Similarly, Brazilian sales reached his $1.2 billion. However, Brazil has a smaller share of the total domestic e-commerce volume.
In addition, EBANX consultants identify BNPL opportunities in Latin America by understanding the target audience. Consumers who do not have a credit card or do not have sufficient credit lines but want to purchase in installments.
moreover, Erica Daguani, EBANX Vice President of Products, better experience will gain traction for BNPL in Latin America. “A key aspect is accessibility. We’re giving credit in an easy way to the right people who pay well but have difficulty proving their scores.”
