Financial Cards and Payments in Latin America

Key Findings

Security and broad acceptance mean cash remains relevant

Despite significant retractions in Brazil and Argentina, Latin America still relies heavily on cash for day-to-day transactions. This is mostly due to an overall feeling of distrust in the banking system in most markets, although the networks are usually the ones that bear the cost of fraud. Also, the universal acceptance of cash is an advantage, due to the relatively low penetration of POS machines when compared with other regions.

Digital strategies to increase frequency of card usage

When compared with other regions, Latin America has been a relatively later adopter of digital wallets, which contribute to driving card payment transactions through increased frequency of use. Over the coming years, issuers are expected to continue investing in more robust digital strategies to face the competition from challengers, as well as enhance the frequency of card usage.

Debit cards as a go-to alternative to cash

Although cash remains relevant in most markets across the region, the democratisation of debit cards as a basic financial product is driving card payment transactions. During the forecast period, debit cards will continue to attract consumers, who will increasingly consider them as a convenient alternative payment method to cash for small-ticket daily transactions.

Challengers to reshape consumers’ relationship with money

Challengers are contributing to a competitive environment where lower fees will become the new norm in Latin America. Overall, Latin Americans see themselves as subject to the whims of financial institutions. For this reason, challengers position themselves as an easy-to-use, educational alternative to traditional retail banks.

Proximity: both an opportunity and a challenge

Proximity payments will experience significant growth over the coming years, contributing to driving card payment transactions. However, this poses a challenge to issuers, which must work to incorporate this technology in new cards.