The Americas as a region is diverse and characterised by a broad range of economic and social development. Like most regions around the world, payment policy is playing an increasing role in driving the rate at which consumer payments are transitioning to paper alternatives. In most cases, COVID-19 has accelerated existing consumer payment trends, as retail shifts online and the emergence of fintech to increase access to financial products and services has accelerated.
Domestic networks are effective at increasing merchant acceptance, establishing card payment standards and reducing the cost of card use. Although it is a more expensive option for regulators, it can have a significant impact in transitioning a market away from cash and developing the expertise to make more informed consumer payment policy.
Fintechs have proven effective at reaching a segment of consumers who did not previously utilise financial products and services. Markets that have reduced the requirement for processing payments have seen an increase in the banked population and growth in the fintech sector.
Ensuring that financial products are simple and transparent will contribute to lasting adoption. Efforts in Latin America to limit interest rates and require clear terms and conditions have led to sustainable growth.
The continued rise in value lost to fraud has the potential to negatively impact consumer card payment growth if not addressed. Fraud losses as a share of total payment value have continued to increase in the US, suggesting current efforts need to be improved.
Financial literacy is a major barrier to adoption in Latin America. As access to financial services increases, so should financial education programmes to avoid abuse or unsustainable debt levels.
The importance of effective consumer payment policy has become clearer during the pandemic. With retail shifting online and with social distancing requirements favouring contactless channels, cash will continue to decline.
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