The payment landscape in Latin America (LATAM) is changing rapidly, opening up to new payment methods and catching up with developed regions. The last 10 years have seen a significant increase in internet use across the region, along with the adoption of digital payments and various alternative payment methods.
Spurred by the growth of the fintech sector, local regulatory developments and innovations, and the impact of the pandemic, businesses have reinvented themselves and made ample use of digital alternatives.
Here is what you need to know about the future of alternative LATAM payment methods, and how Skrill can be your partner in making the most of the current market.
The LATAM payment landscape: digital payments enter the mainstream
Looking at the LATAM payment landscape, it is certain that changes in consumer behavior and the use of different payment methods are here to stay. These changes are due to several conditions.
Internet and smartphone adoption in the region has been growing steadily in the last 10 years. By 2020 internet use had increased to 66%, up from 50% in 2015. After the start of the pandemic, as an April 2022 survey by Paysafe demonstrates, digitalization, as well as smartphone adoption, grew, leading to the acceleration of eCommerce and the demand for digital and alternative payment methods (APMs).
Apart from the pandemic, which played an important role in creating these shifts, government strategies and regulations have also had a big impact (Euromonitor International). For example, one of the big regional digital payment frameworks Pix, in Brazil, has paved the way for even faster, simpler, and more secure digital payments. Pix is what’s known as a central bank fast retail payment system (FRPS).
This framework significantly simplifies and improves the instant payment process, providing both merchants and consumers with cheap and fast instant payment options. As a result, it has begun to move more and more consumers to digital and challenged traditional payment methods. It has enabled them to make faster payments and has opened the door for solutions such as digital wallets.
Financial inclusion in the region is slow. However, Pix, along with Mach in Chile, PSE in Colombia and others, have laid down the groundwork necessary to open digital payments to greater parts of the region’s populations. Importantly, they have also stimulated the maturing of the digital payments ecosystem and the emergence of solutions such as payment gateways and various interbank initiatives.
Alternative payments methods in Latin America: banks still dominate but APMs are gaining ground
Because of the specifics of the payment landscape and the place of cash as a payment method, APMs in LATAM are slow to take root. When it comes to digital transactions, payments from accounts, such as wire transfers and instant payments, have the highest value of all payment methods (UN ECLAC). In terms of volume, cards (debit and credit) are the most popular non-cash method in the region, accounting for more than three-quarters of all electronic transactions.
For users of banking services, thanks to the various public digital payment frameworks, banks, and their instant payment options remain the most popular services. This makes alternative payment methods such as interbank initiatives and mobile money a sought-after option. At the same time, digital wallet use has also been growing annually and currently makes up about 11% of online transactions.
On the merchant side, a gradual increase in eCommerce payment gateway adoption is also occurring. Gateways enable the use of instant transfer services provided by banks to facilitate person-to-business (P2B) transactions. As digital payments become more mainstream, gateway adoption and a greater variety of payment methods will naturally follow suit.
Enable alternative LATAM payment methods with Skrill
As the payment landscape in the region matures, and digital payments become a preferred transaction method, merchants need a reliable LATAM payment provider. Skrill is uniquely positioned to serve eCommerce merchants in the region due to its support for a large variety of already existing alternative payment methods in Latin America.
Adopting Skrill, merchants are enabled to provide their customers with the following benefits and increase their financial inclusion:
- Payments through credit and debit cards, digital wallets, instant bank transfers, supported by regional payment frameworks, and various other APMs
- Payments in one of over 40 different supported currencies
- Quick and frictionless checkouts
- A high degree of payment and personal data protection
Moreover, using Skrill, merchants themselves will be enabled to expand their operations and offer their services and products to a greater variety of customers. Benefits to merchants include:
- One account to manage all funds with multi-currency support
- High degree of fraud protection
- Simple and fast integration with only one API
- Multi-lingual support
- An improved user experience, resulting in higher conversion and retention
Are you looking for the right LATAM payment provider to help you with eCommerce payments? Sign up for a Skrill business account today!
Want to learn more about integrating Skrill? Have a look at our detailed integration guides!
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