LatAm22: How fintechs are bringing innovation to payments in emerging markets

EBANX, the fintech specialized in cross-border payments in emerging markets, published a few days ago its annual report Beyond Borders 2022/2023, which has become a benchmark for tracking online consumer behavior, innovation in payment methods, and new fintech trends in emerging markets.

It is a comprehensive study carried out by EBANX’s engineers in partnership with Americas Market Intelligence (AMI), which includes, for the first time, some of the fastest-growing African countries in digital commerce and 15 countries in Latin America.

Wagner Ruiz, Co-founder and Board Member of EBANX, participated in the Fintech Nexus LatAm 2022 event to discuss the outlook for payment innovation in emerging markets. The executive highlighted that one of the most exciting results of the study conducted by the company is how much cross-border payment and commerce have grown and commented on how Ebanx is working to innovate in these sectors.

“If you look at overall growth in 2022, we’re talking about 37%. But look how incredible and interesting the difference between domestic and cross-border payments so we will keep it to 26%, 27%, and 25% CAGR for the general purpose. But if you look, the cross-border commerce is growing 34% a year,” the executive said.

“So, how are we handling that? And I think this is the most important thing – we specialize in cross-border payments; We work in a few countries for global purchases. But at the end of the day, what we have been doing and helping [with] for the last 11 years is providing new and alternative payment methods and also improving the credit bar wage for this moment.”

The impact of alternative payment methods in LatAm

Ruiz also commented on how the explosion of alternative payment methods in Latin America is changing the commerce ecosystem.

For example, account-based transfers – including instant payments from Brazil’s famous and widely successful Pix – have been nearly doubling in volume each year in LatAm’s digital commerce sector since 2018, according to Americas Market Intelligence’s latest data analysis.

By the end of 2022, Ruiz said the volume of such transfers is expected to reach around $70 billion, with the most significant shares in Colombia (30% share of the country’s e-commerce), Brazil (24%), Guatemala (11%), Bolivia and Chile (10% for both).

See more: LatAm’s New Mastercard Black Credit Card

According to the EBANX report, by 2025, this type of alternative method in Latin America should reach $121 billion in volume after growing at an annual rate of 33%.

“Our part in this job, I believe,” said EBANX’s co-founder, “is to provide a seamless and easy payment method for a cross-border commerce that is growing a lot,” he concluded.

Digital wallets adherence is growing fast

Digital wallets were another of the fastest-growing alternative methods this year. According to EBANX, they are expected to increase in use by 20% annually through 2025 across all regional digital commerce.

Also, through the end of 2025, the volume of e-wallet payments is expected to exceed $70 billion, representing approximately a 10% share of the entire Latin American digital commerce market, with Argentina and El Salvador topping the list of countries studied, with a 23% share of their respective markets being paid with this method, followed by Bolivia (14%), Peru (13%), Uruguay (12%), Brazil (11%) and Mexico (8%).

For Ruiz, this growth has been driven mainly by increased demand for digital services in Latin America. Thanks to their instant confirmation, good user experience, and rewards and cash-back programs, digital wallets have become very popular in sectors that are also seeing extensive growth in their capital, such as influencers.

In parallel, cash payments are heading for stagnation in Latin America’s digital commerce sector, said Wagner Ruiz. In 2018, this type of payment accounted for almost 20% of online purchases in the region; now, it only represents 8%, according to AMI. For the EBANX co-founder, digital wallets are replacing cash. The widespread digitization that accelerated in recent years and new regulations driven by players such as the Central Bank in Brazil have played a vital role in this.

Source: Fintech Nexus

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