In Payments

On April 20, 2022, the Americas Market Intelligence (AMI) payments team held a lengthy discussion about Megatrends 2022 in the payments ecosystem of Latin America, through a two-day webinar.

Go to the video of day 2 of the webinar>>

Below is a recap of the discussion on day 2 of the Payments Megatrends Webinar (click here to read the day 1 recap). This time, the AMI payments team made an exhaustive assessment of new alternatives in investment, savings, and credit that are transforming the habits of Latin American consumers:

  1. Credit systems are being decoupled from credit cards
  2. Traditional savings systems are in decline
  3. Cryptocurrencies are being used to purchase “digital dollars”

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1. Credit Systems are Being Decoupled from Credit Cards
The disruptive potential of Buy Now Pay Later and other new credit systems

A new phenomenon is taking place in Latin America, in which credit approval is being linked to the buyer’s identity, instead of a payment credential. In particular, the Buy Now Pay Later (BNPL) model now accounts for between 1% and 5% of e-commerce spending in the region, according to estimates by AMI’s team. “In Latin America, BNPL covers a wide range of options, which give us a means of categorizing the type of solution that players are offering: some are targeted at the 169 million debit card holders who do not have a credit card; while others attempt to serve an unbanked population of 117 million. In Latin America, we also have 99 million people with credit cards. Of course, all these segments require different strategies,” explains Lindsay Lehr, head of the AMI payments division.

Between 15% and 35% of e-commerce uses some system of financing, according to AMI

According to AMI analysis, Peru, Colombia, and especially Mexico, are the countries with the greatest potential for the BNPL model, taking into account the level of credit card penetration, and the debt-carrying capacity of their inhabitants.

On the other hand, some players are moving in with models of payment on credit with cryptocurrencies. A good example of this is Nexo, which was launched in Europe. It is a wallet with a crypto card service, offering fiat credit backed by the user’s cryptoassets. In other cases, users can employ their cryptocurrency directly to make purchases. Notable players in Latin America are NovaDAX in Brazil, and Belo in Argentina.

For more information: Go to the presentation of the webinar on Payments Megatrends in LatAm 2022>>

2. Traditional Savings Systems are in Decline
New savings and investment products

Local savings options are becoming less and less attractive, with interest rates failing to reach 10% per annum. Data from EUI suggest that the most “fortunate” markets, such as Colombia, Chile, and Brazil, could have an interest rate close to just 4% by 2026. The falling interest rate and rising inflation will disincentivize traditional savings in the coming years.

In Mexico, the interest rate for savings will be less than 2%, according to EUI

We should note that this megatrend will give a boost to the use of alternative savings systems, particularly those involving cross-border money remittances, cryptocurrency purchases and investments, and access to the securities exchange. Some players, such as Ualá and BITPOINT, are already making a name for themselves.

For more information: Go to the presentation of the webinar on Payments Megatrends in LatAm 2022>>

3. Crypto and the Digital Dollar
Blockchain solutions focused on monetary stability and the rapid movement of money

New market opportunities are being created in Latin America, namely stablecoins or stable cryptocurrencies, which allow users to keep their money safe in “dollarized” accounts, which have terrific potential for the region. In fact, Lehr says, this could generate problems for Central Banks, which seek to promote their digital currencies (CBDC) in a centralized environment.

One in three Latin Americans have bought cryptocurrencies, according to AMI surveys

In addition, stablecoins are expected to compete with other kinds of products. For example, crypto cards, which would facilitate cryptoasset liquidity. Lemon Cash in Argentina, for example, offers rewards in cryptocurrencies for those using their card. This expansion in supply could generate highly affordable alternatives for users.

For more information: Go to the presentation of the webinar on Payments Megatrends in LatAm 2022>>

FREE REPORT

The Cryptocurrency Revolution in Latin America Payments

A free whitepaper detailing the growth of crypto, current use cases and what to expect in 2022 and beyond

More Exclusive AMI Data on Payments Megatrends 2022

The megatrends mentioned here are based on data collection and expert analysis by the Americas Market Intelligence payments team. A lot of other important data were shared on day 2 of the Payments Megatrends Webinar, including the following:

  • In Latin America, there are 99 million credit card holders, compared to 169 million who are debit card holders only, and 117 million who are not banked.
  • There are at least four BNPL models in Latin America. Notable BNPL players include KueskiPay, Aplazo, Brubank, and Mercado Pago.
  • Brazil is the country with the highest credit card penetration in Latin America, equivalent to 40%. In Peru, Mexico, and Colombia, penetration is not even at 20%.
  • In Brazil, the interest rate on deposits will come close to 9% in 2022, but will drop to 4% by around 2026. Similar scenarios will be seen in the rest of Latin America.
  • Aggregate national saving (as a percentage of GDP) will decrease during the 2022–2026 period in certain economies: -3% in Brazil, -2% in Chile, and -2% in Mexico.
  • One in three people in Latin America are interested in buying cryptocurrencies.
  • The most popular use cases for cryptocurrencies in Latin America are: 1. Investment; 2. Savings protection; and 3. Receiving international remittances.
  • Examples of “dollarized” accounts in Latin America, whether or not they include the use of stablecoins: Airtm, Wise, Bitso, Reserve, Zulu

And much more.

Download the presentation of Payments Megatrends in LatAm 2022

Watch the video of the second day of the conference on Payments Megatrends in LatAm 2022

New alternatives in investment, savings, and credit that are transforming the payment habits of Latin American consumers.

Other Available Data on the Payments Industry in Latin America

Aside from the information shared in this webinar, Americas Market Intelligence (AMI) offers its clients a variety of exclusive data on payment methods in Latin America, including:

  • Spending in credit and debit in Latin America
  • Market share of new payment models, such as BNPL and social commerce
  • Total e-commerce spending by payment method in Latin America
  • Exhaustive 2020–2024 data on electronic commerce in 11 LatAm markets
  • List of fintech providers, payment facilitators and industry players, and their impact on Latin American markets

Contact us for pricing, and payment and delivery options.

Moving Beyond the Data

We conduct a variety of market intelligence studies aimed at identifying opportunities, reducing the risks associated with regulations or processes, and finding allies in specific local markets. In the payments sector alone, Americas Market Intelligence has conducted more than 400 studies for major companies worldwide. Contact us to find out more.

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