The overall consumer payments value performance will remain weak in 2021, after a challenging 2020, with Coronavirus (COVID-19) limiting spending opportunities and also having a major impact on local economies in the region. While the pandemic helped speed up the move away from cash, which has been declining in both 2020 and 2021, card payments will return to positive growth in 2021, and electronic direct/ACH transactions remained on a positive growth trajectory throughout the pandemic.
Although cash was consistently losing out to alternative forms of payment over the historic period, with the pandemic and its lockdowns and hygiene concerns adding further impetus to this, it continues to be an important mode of payment – still the dominant payment means in many of the countries in the region. Nevertheless, consumers continue to be won over by the convenience of non-cash payment methods, with government policies also encouraging the trend towards financial inclusion and cashless transactions.
Consumer spending patterns in Latin America were significantly affected by the pandemic in 2020, with total consumer payment transactions value still, just, in negative territory in 2021. For some, spending has been limited to essentials during the pandemic, due to the economic impact of the anti-COVID-19 measures. For most, avoiding the handling of cash for hygiene reasons was encouraged, driving use of card/contactless payments and electronic direct/ACH transactions.
M-commerce has continued to gain momentum, with the pandemic representing an ideal environment for further growth in this area. Increasing internet penetration and smartphone ownership are also helping to drive the continued development of m-commerce, while the introduction and subsequent expansion of 5G networks across the region will provide additional impetus going forward.
In spite of the economic fallout from COVID-19, the post-pandemic period is expected to see a return to positive annual growth rates for consumer payments, but not until 2022, with a return to 2019 value levels expected to take a little longer. Card payments should overtake cash payments during the forecast period, with electronic direct/ACH transactions also remaining dynamic.
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