The latest publication from Hamburg-based desk research company yStats.com titled “Latin America Online Payment Methods 2021 Post COVID-19” shares insights into the online payment market in Latin America amid and post the COVID-19 health crisis, analyzing and summarizing the important figures, forecasts and trends in the region. The publication reveals that among consumers in Latin America the most common payment method was a “credit card” when shopping in-store as well as online.
After the onset of COVID-19, cashless transactions via contactless cards were expected to surge by 50% globally from 2020 to 2021
COVID-19 had a significant impact on the payment market across various industries globally. Due to imposed restrictions by the governments, traditional payment forms shifted to digital ones as they were faster, plus more secure and convenient amid the health crisis in 2020. This contributed to the acceleration of various contactless and online payments and the emergence of alternative ones. Mobile payments particularly were rapidly adopted in the countries such as Indonesia, India and China, as businesses concentrated on providing customers with mobile- or digital-first platforms that include opportunities to pay with online cards, via smartphones, watched or other digital gadgets. With these reforms and consumers’ behavior change, various trends emerged globally. Namely, cashless transactions were projected to more than double over the world by 2030, with the Asia-Pacific region leading in numbers. Whereas, the two lagging regions were Africa and Latin America. Moreover, consumers mostly turned to contactless cards over the year 2020, so the value of transactions executed via contactless cards was expected to grow by about 50% worldwide from 2020 to 2021, accounting for almost 80% of the overall contactless transactions value. Furthermore, one of the alternative ways that gained as well momentum globally in 2020 amid COVID-19 was BNPL (Buy Now Pay Later) service. Due to the increased demand in splitting the costs with credit, the BNPL transactions were forecasted to more than triple from 2021 by 2026.
In Latin America, “smartphone” was the most widely used device for shopping online in 2020
When it came to shopping online in Latin America, consumers of various nations had divergent preferences regarding the device to use to purchase or pay online. The most common device used to purchase digitally was a smartphone, increasing in use compared to 2019. In fact, Mercado Libre, the leading online merchant in the region reported that over 70% of its sales in 2020 were carried out through a mobile device. In addition, in Brazil, the value of online purchases made via a mobile phone surged by nearly 80% from 2019 to 2020. Despite this, a quarter of consumers in Brazil responded to a 2021 survey that they did not think that mobile payment apps are safe and therefore do not use them and a similar percentage of respondents did not know how they worked. In the Dominican Republic, however, although mobile payments were popular, the number of such transactions dropped by about 70 thousand from 2019 to 2020, perhaps due to the economic crisis occasioned by the pandemic.
Chile was the leading market where consumers reported reducing cash use in 2020
After the onset of COVID-19, the use of cash in Latin America decreased significantly, as over 60% of respondents to a survey claimed that they reduced cash use by at least 20% in 2020, with Chile leading in this reported drop (74%). However, in some countries, “cash” still prevailed over the other forms of payments – in Argentina and Colombia, around 80% of consumers reported paying with cash within a recent month in 2020. When shopping in-store and online, Latin Americans’ first choice of preferred payment method was “credit cards”, and the second choice fell on “cash” in Argentina, while “debit card” was in second place in Colombia. Real-time payments are also increasing in use in the region, with growth projected through 2025. The fastest growth of RTP was predicted to be seen in Colombia, with a CAGR of over 100%, and in Peru, a CAGR of over 70% is expected.