Digital retail sales are set to skyrocket in Latin America in the next few years, predicted to reach $160 billion by the end of 2025, according to one recent report. Such growth occurs as interest in — and usage of — emerging digital banking and payment methods expands among Latin American consumers. Another study found an 80% increase in the number of consumers downloading mobile financial apps year over year.
Online businesses and eCommerce marketplaces are eyeing the Latin American region with more interest, but breaking into the market can be tricky, especially for international businesses unfamiliar with its diverse payments ecosystem. Latin American consumers have become increasingly open to nascent digital or mobile payment methods. Still, localized payment tools remain dominant across different markets — making it key for marketplaces to understand and adapt to disparate payment preferences across the region.
In the inaugural Global Merchants’ Guide To Latin America, PYMNTS examines how the Latin American payments space is changing, how local payment methods are playing a role, and what marketplaces and digital merchants must understand about such shifts to successfully gain a foothold within the region.
Around the Latin American Payments Ecosystem
The popularity of eCommerce is expanding as digital payment tools are becoming more readily available to Latin American consumers. Credit and debit card usage is expanding, with such cards accounting for higher percentages of digital purchases, for example. One recent study found cards were responsible for 71% of eCommerce purchases within Latin America in 2020, making them the dominant virtual payment method throughout the region. Marketplaces and other digital businesses looking to grow loyalty and engagement among Latin American consumers must take such shifts into account to stay competitive, making it important for these entities to keep a close eye on cards and the expanding use of mobile wallets and instant payments.
Internet and smartphone penetration are also ramping up across Latin America, leading to rising use in mobile-optimized payment methods both online and in brick-and-mortar stores. Sixty percent of digital purchases in Latin America were made via mobile devices thus far in 2021, compared to the 55% such transactions accounted for in 2020. This indicates smartphones and mobile payment tools — notably mobile wallets — will likely play a key role in the emerging eCommerce and digital payment ecosystem within Latin America, especially as comfort with online shopping continues to expand.
One Latin American marketplace taking steps to create space for emerging payment methods is Uruguay-native platform PerdidosYa, which recently announced a partnership with card network Visa. The team-up will allow PerdidosYa customers to migrate from cash-based payments to cards when shopping online, enabling the platforms more than 110,000 merchants to accept and finalize payments at speed. Supporting faster payment speeds and delivery times is becoming critical for eCommerce platforms of all sizes — especially those such as PerdidosYa, which specializes in smaller-ticket Q-Commerce purchases — to remain competitive as online shopping and payments become more widespread in Latin America.
For more on these and other stories, visit the Guide’s News & Trends.
How Dafiti Is Gaining Latin American Customers’ Loyalty Through Payment Diversification
eCommerce has rapidly become one of the more popular channels for Latin American consumers to shop and pay, but this does not mean customers across the region are all interacting with this new virtual environment in the same way. Marketplaces wishing to enter the region must be sure they are not employing a one size fits all payment strategy. It is essential for such platforms to understand and make room for a diverse range of payment options, including localized payment methods that remain dominant in their respective markets, explained Camilo Riveros, director of innovation for Latin American eCommerce merchant Dafiti.
To learn more about how Dafiti is capturing customer loyalty within Latin America, visit the Guide’s Feature Story.
Deep Dive: Why Marketplaces Must Understand Local Payments to Succeed in Latin America
Consumers across Latin America flocked to online platforms during the height of the pandemic, sending eCommerce sales figures and customer numbers skyrocketing. One recent report found that 52 million consumers in the region made their first online purchase in 2020, more than double the projected estimates from before the global health crisis. This has turned Latin America into an innovation hotbed, with marketplaces worldwide seeking ways to gain the trust and engagement of the region’s nascent digital consumers. Such marketplaces must pay careful attention to how the payments environment in Latin America is shifting, however, and the role that both emerging digital payment methods and, crucially, local payment methods play within it.
To understand why marketplaces must examine local payment methods to grow customer engagement, visit the Guide’s Deep Dive.
About the Guide
Global Merchants’ Guide To Latin America, done in collaboration with EBANX, takes a close look at retail and payment developments within Latin America and how global marketplaces and brands can keep pace with such shifts to expand customer engagement and loyalty.