Financial cards and payments experienced a challenging year in 2020, with Coronavirus (COVID-19) speeding up the move away from cash, as consumers and retailers tried to avoid handling it, although overall consumer payments went into decline. Only debit cards and m-commerce were able to emerge relatively unscathed from the impact of the pandemic, with contactless payments to the fore. Current forecasts expect a return to positive growth in consumer payments from 2021.
Although cash was consistently losing out to alternative forms of payment over the historic period, it continues to be an important mode of payment. In fact, it is still the dominant means of payment in a number of countries in the region. Nevertheless, as the banked population continues to expand and more retailers install POS payment terminals, consumers are increasingly being won over by the convenience of cashless payment methods. Government policies are also encouraging the trend towards financial inclusion and cashless transactions.
Consumer spending patterns in Latin America were significantly affected by the pandemic in 2020. When possible, people avoided handling cash for hygiene reasons, encouraging greater use of card and, in particular, contactless payments. Debit cards benefited from this, with people also looking to keep control of their spending in a difficult economic environment.
M-commerce continues to gain momentum across the region, with the pandemic representing an ideal environment for further growth in this area. Increasing internet penetration and smartphone ownership are also driving 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 impact of COVID-19, the post-pandemic period is expected to see a return to positive annual growth rates for consumer payments from 2021. Card payments will overtake cash payments in the region during the forecast period, while electronic direct/ACH transactions will be particularly dynamic, albeit growing from a still relatively small base.
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