Despite numerous economic challenges across most of Latin America (LATAM), where many countries are considered to be ‘third-world,’ eCommerce and the world of FinTech are expanding rapidly. Some LATAM countries with emerging markets are the fastest-growing sectors in a region slated to balloon in the near future.
As things stand today, it’s a remarkable statistic for many to fathom but roughly 70-75% of the citizens of LATAM either don’t hold bank accounts or are severely underbanked. That’s the main reason FinTech is flourishing, while new and exciting technologies provide innovative ways for 600 million people to shop and purchase goods. With the trend towards FinTech and online shopping, many companies are eyeing South America for its future potential.
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Let’s explore the FinTech trends that are clearly shaping the future of payments in Latin America.
Digital wallets save consumers’ personal payment information, which they can use to purchase items online. People in Latin America favor third-party alternative payment methods over traditional banking options, and digital wallets are a convenient option, as users only need to validate their details once.
Local Payment methods are becoming more popular generally in Latin America, while every country has its own local methods of choice. For example, in Brazil, Boleto, which works using a voucher system, allows consumers to simply print their payment voucher and use them to pay bills or purchase items such as groceries. PIX is another real-time payment method in Brazil that has grown to prominence more recently, much-loved by locals.
In this day and age, much of the world is moving in the direction of digital payments as cash and cheques become less popular for a variety of reasons. While cash has been king for many years across most of Latin America, that trend is changing and it’s changing fast. This fact is, in turn, transforming the way people shop, and that means that online stores need to be more open and far more flexible when it comes to accepting cards, digital wallets, and other similar services.
Neobanks are included under the umbrella of FinTech sector services and they’re increasing in popularity in many countries in LATAM. Essentially, neobanks are online banks that address various issues faced by people wanting to enjoy ease of access and speedy financial services. Larger, more traditional banks are losing popularity as consumers need their transactions to be handled fast.
Paying in installments
Purchasing goods and services by paying in installments is common in LATAM, especially in Brazil. It’s a fact that in Brazil, up to 50% of all online purchases are carried out using an installment schedule, sometimes referred to as ‘quotas’ or ‘months without Interest.’ Many South American countries pay in installments for larger, more costly items, including international vacations and cars.
In conclusion, there’s no question that consumer behavior in Latin America is evolving rapidly, and that paves the way for some amazing opportunities when it comes to entering the massive LATAM market. Understanding and facilitating consumer preferences is vital and presents endless opportunities for those with the right infrastructure, network, and, most importantly, understanding and local market know-how. As for the trends in Latin America, companies planning to enter the market need to be flexible, savvy, and ready to furnish consumers with local payment services. Nothing is more important than studying and understanding which solutions are the best match for which countries.
To find out more about how Zotapay (Zota) can help your company grow, feel free to reach out!