Alternative payment methods have gained ground in the Latin American region, currently accounting for 47% of e-commerce, according to data provided by the “Latin America Digital Payment Trends 2023” report, released by El Economista.
The report highlights a 36% decline in cash usage, with increasing adoption of methods such as electronic transfers, prepaid cards, digital wallets, cryptocurrencies, and Buy Now, Pay Later (BNPL) solutions.
Furthermore, the report emphasizes the increasing use of digital payments in Mexico. According to the 2021 National Survey of Financial Inclusion, 1.8 million users between the ages of 18 and 70 prefer electronic transfers or other payment methods for transactions below 500 pesos instead of using credit cards.
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The report also highlights the growing popularity of alternative payment methods in the region, including digital wallets, prepaid cards, real-time transfers, cryptocurrencies, and the Buy Now, Pay Later scheme.
The data reflected in the Kushki report aligns with global trends, where digital wallets are the most popular and fastest-growing alternative payment method.
By the end of 2023, it is expected that the number of digital wallet users in Latin America will exceed 605 million, positioning the region as the third-largest in terms of digital wallet usage, behind only China and Africa, according to Statista.
This is changing the payment landscape in our region, according to Alejandro Guízar, President and Founder of Billpocket Somos Kushki, during the latest edition of Kushki Talks, titled “Goodbye to Cash: The Future Belongs to Alternative Payments.”
The collaboration of governments in Latin America in updating the payment ecosystem is also highlighted as a relevant factor in these advancements.
What does it imply for venture capital?
- The increase in alternative payments in Latin America can offer investment opportunities in startups and companies developing solutions and technologies related to these payment methods.
- Venture capital investors can seek opportunities in emerging companies dedicated to the development of digital wallets, mobile payment solutions, blockchain technology, and other innovations in the alternative payment space.
- The growth of digital payments and the decline in cash usage can drive the adoption of technological financial solutions in general, potentially leading to an increase in venture capital investments in the region.
What does it imply for fintech in Latin America?
- The increase in alternative payments in Latin America provides significant opportunities for fintech companies in the region, as they can develop and offer innovative solutions in the field of digital payments and financial technologies.
- Latin American fintech companies can leverage the shift towards alternative payment methods to expand their user base and increase their market share in the region’s financial industry.
- The growth of digital payments and the decline in cash usage drive the demand for digital financial services and technological solutions, creating a favorable environment for the development and growth of fintech in Latin America.
For detailed information, visit: El Economista