Cash has long been king in Latin America, but e-payments are quickly picking up speed as locals are lured in by the ease of digital shopping.
Traditionally, Latin America has been a cash-dependent economy, building on the general distrust of banking institutions plagued by financial crises. Latin Americans are known to withdraw their money and store it in lump sums, with a recent Americas Market Intelligence report estimating that 90% of payments in Latin America are still made in cash.
However, with the lower and middle classes starting to seek ways to purchase digital goods and services (and street smart locals unwilling to leave themselves open to robberies), e-payments in Latin America are set to explode, most notably in Brazil. Nearly 80% of the adult population in Brazil owns some kind of payment card, with 30% of all household expenses paid via card, reports the Brazilian Association of Credit Card Companies.
According to Americas Market Intelligence’s 2017 Trends for Latin America’s Payments Industry paper, Brazil has become the most profitable credit card market in the world, with 8% growth in e-commerce in 2016, and a projected 10-15% increase this year.
In 2016, Brazil recorded US$16.58 billion in retail e-commerce sales, and that figure is expected to almost double in the next five years.
The projections for the coming years herald a huge shift in the market, which means banks, merchants and card issuers will need to embrace digital payment methods such as mobile wallets, e-payment apps and NFC technology. Consumers were first introduced to contactless solutions in 2013, and, as of 2016, there were almost two million NFC-enabled POS terminals in Brazil.
The number of digital buyers is also steadily growing, as is the demand for online shopping methods. Experts believe that there will be 94.6 billion Brazilians buying goods and services online by 2021, a 72% increase from 2016.