Virtual commerce and the development of digital wallets has become a turning point in recent years when it comes to using money, as it has allowed many people to stop carrying bills or having to resort to cards. time to do your shopping. This without taking into account the expansion of the market and the possibility of buying in other countries without having to leave home.
However, cash continues to be king in Colombia, as confirmed by a Prosegur report, which shows that, along with transfers, they are the means preferred by people when paying, even having one of the average highest in Latin America, surpassing countries like Mexico, Ecuador or Brazil.
rmation: New alert on the Nation’s finances: these are the problems that persist
Portafolio spoke with Andrés Daza Ferrer, general director of the business from ProSegur Cash in Colombia, who said that when asking people about their preferred payment method when paying, it was found that 42% opt for cash, 28% for transfers, 19% for cards debit, 5% for credit cards and just 3% for digital wallets.
“During the last two years, Colombia has a particularity in the behavior of the use of cash compared to other countries, and that is that since 2010, the participation of the use of cash in household spending has been decreasing at an annual rate. more or less between 1% and 2% per year. So, if we look at what was happening in 2010, we were at 93% and today we are around 85%,” he explained.
Card and cash
iStock
When explaining the origin of the resources, the report maintains that 76.3% is from salaries, while 19.59% is from credits and 4.12% is obtained through remittances. This is an important change, since 12 years ago, eight out of every 10 pesos came from salaries and only 13% from debt.
“People in Colombia continue to use cash for consumption, because the weight of cards and access to credit has decreased in the last two years. People’s consumption spending related to access to credit decreased compared to what happened in 2022 or even in previous years. We therefore remain at around a share of more or less 86% of household spending,” said Daza Ferrer.
These experts added that a greater inflow of remittances and a low The use of credit by households has led to cash gaining ground so far in 2024 and having a share above that of 2021. However, they warn that the contribution of cash to spending has slowed, largely in response to a deteriorated labor market, which implies income restriction for households.
Also read: The good, the bad and the ugly of the GDP data in the third quarter
From Prosegur they added that although credit has tried to emerge slightly in the contribution to spending, this will be a long process for it to reach the levels of 2021 and 2022. They also highlighted that credit placement has recovered slowly, but for the beginning 2024 seems to be on pause and with caution, the low dynamics of placement on credit cards can be attributed to a lower average ticket than seen in previous periods.
“In Colombia we continued, until the previous month, with high inflation. So, this growth in consumption, solely due to inflation, helps market dynamics and also the digital scenario. The country is experiencing changes that They can be taken advantage of from the market and homes, and that is what we see in the data,” he indicated.
The report also highlights that this dynamic of caution in the recovery of credit placement has stabilized the weight of credit in household spending around 20% and could have given a greater participation to cash, but this behavior can continue to be a platform for impetus for the use of different means of payment such as debit cards and digital wallets in the low-amount disbursement segments, while credit takes a recovery path while waiting for lower interest rates.
Consumption
iStock
Payment ecosystem
Regarding the possibility that the changes that the market is experiencing translate into a loss of ground for cash, Andrés Daza made it clear that “one thing does not take away from the other. For example, the use of electronic deposits for people rose from 48% to 60%, or access to electronic deposits that has to do with digital wallets rose from 62% to 72%.”
“We are all using digital wallets or access to digital products more. The thing is that the base is still small. Its participation in total consumer spending is still small, but there is a market that is growing for everyone, including this sector, only this specific product starts from a lower base,” he explained.
In all generations, cash led as the main means of payment in homes and Centennials maintain first place as the generation that uses this resource the most when paying, while in generation debit, which is explained in the greatest These people’s ability to save and a lower tendency to get into debt.
Other news: The foods that dropped the most in price in the country during October
“Cash is the main means of payment at the three income levels and has gained participation so far in 2024 as a result of lower use of credit compared to 2023. Likewise, the digital wallet is a means of payment that has gained importance within the three income levels in response to its ease, speed and acceptance in different purchasing channels such as neighborhood stores, street vendors and the Internet.”
Regarding what would come forward with this trend, Prosegur recommended taking into account that there is a cautious recovery in credit placement, maintaining its weight in household spending and that it is increasing in access and use of financial products, especially savings, encouraged by high interest rates.
E-commerce / Electronic commerce.
Courtesy – Rocketfy.co.
“We also see signs of stabilization in the growth of low-amount deposits, concentrated in the young population and used mainly for transfers and a greater representation of the digital channel in monetary operations, with growth in dataphones and a decrease in physical correspondents,” he concluded.
Finally, the General Director of the ProSegur Cash business in Colombia, highlighted that financial inclusion is another front that is advancing correctly and that in the future this could influence a change in trend regarding the means of payment thatthat turns more towards digital, although it made it clear that there are still gaps to overcome.
Add Comment