Boosting cross-border trade in Latin America

Download Digitizing Payments in Latin America to learn more about cross-border commerce and digital payments in Latin America

E-commerce is rapidly establishing itself as an important industry in Latin America, with a report revealing that 267 million online shoppers now live in the region.

This growth is occurring simultaneously as access to online banking channels and tools expands, with an October 2020 report revealing that 40 million Latin Americans were banked in the five months preceding the publication of the. report. E-commerce is growing: there are now 267 million digital shoppers in Latin America.

Increased access to banking services and online payment tools also means that more consumers are looking to interact with retailers outside of their own markets who accept credit or debit card payments rather than cash at checkout. pickup, for example. This, in turn, creates opportunities for payment service providers (PSPs) and financial institutions (FIs) to smoothly facilitate these cross-border transactions. These entities need to carefully monitor the evolution of payment preferences in the region and overcome any challenges related to the development of payment regulation and infrastructure.

In the last Digitization of payments in Latin America Playbook, PYMNTS examines how e-commerce and cross-border commerce are developing in Latin America and how banks and payment providers can seize the opportunity of cross-border payments.

Around the world of payments in Latin America

The Guatemalan FI Banco Industrial is among banks seeking to support transparent cross-border payments, announcing a partnership with money transfer and money transfer service Western Union. This partnership will allow the bank’s customers to send and receive funds in more than 200 countries. Between 7% and 10% of Guatemalans live abroad, making access to these capabilities essential and helping banks offering convenient cross-border payment tools to retain and retain customers. These solutions will become increasingly important to Latin American consumers who shop and pay more frequently online.

Local payments thrive: 83% of online purchases worldwide were made through local payment methodsCryptocurrency is another payment method that is gaining more interest among payment providers and regulators in Latin America, which could alleviate some of the traditional problems associated with cross-border payments. A government delegation from Belize met with representatives of Banco de Mexico to discuss banking and trade regulations between countries, including the possible development of a cross-border payment system using electronic money. The proposed cryptocurrency would replace the US dollar for such transactions. The meeting resulted in the creation of a working group to continue to study the idea and how to implement it.

To learn more about these and other stories, visit the Playbook News and Trends.

How supporting local payments can support the future of cross-border commerce in Latin America

E-commerce adoption grew rapidly in Latin America in 2020, with consumers moving closer to cross-border commerce and exploring brands and channels outside of their home markets. However, as public health and safety guidelines soften, challenges arise that could hamper its growth.

The continued dependence on cash transactions in many Latin American markets and the lack of regulatory standards for cross-border transactions could hamper the adoption of electronic payments and e-commerce, explained Souheil Badran, Executive Vice President and Director from the operation of Northwestern Mutual. This makes the role of FinTechs and PSPs essential as these entities seek to advocate for the modernization of cross-border commerce in the region.

To learn more about the future of e-commerce in Latin America and how FinTechs and PSPs fit into it, visit the Playbook’s Feature Story.

Deep Dive: How Payment Providers Can Seize the Latin American Cross-Border Payments Opportunity

Online shoppers in Latin America still use cash for transactionsConsumers in Latin America are going online to shop more often, with a report predicting that there will be 77 million digital shoppers in Mexico alone by the end of 2025. Online shoppers are also experiencing digital shoppers more often. credit and debit cards when shopping, leading many to consider retailers outside their own markets with the ability to accept such payments. This gives payment providers key opportunities to drive support for cross-border digital payments in Latin America, but they must understand consumers’ local payment preferences and needs to be successful.

To learn more about how payment providers can navigate the Latin American cross-border payments space, visit Playbook’s Deep Dive.

About the playbook

The Digitization of payments in Latin America Playbook, a PYMNTS and Kushki collaboration, examines the latest developments in digital payments in Latin America, including how payment service providers can meet consumer demands and gain a foothold in the region.

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