Consumers in many markets continue to replace cash with cards and alternative payment methods, such as digital wallets, or immediate transfer solutions from account to accountamong others.
So says the most recent study by the consulting firm Bain & Company, Future of Consumer Payments, which ensures that revenue through these digital payment methods would grow by 9% per year and they would achieve income of US$35,000 million, in Latin America by 2026. Rates well above those of Europe (4%) and North America (6%).
In addition, he says that while account-to-account payments, such as PSE, will gain popularity with annual growth in volume of 11% through 2026, cards will continue to be the largest revenue generator in the payments industry for years to comerepresenting more than 70% of them, despite being 30% of the volume, in the region.
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The report highlights that consumers are increasingly digital, so much so that e-commerce represents 10% of retail sales in Latin America and its penetration is expected to continue increasing until 2027.
Chile and Brazil are the ones that, by 2027, will have the highest penetration of electronic commerce in the region, with 19% each. While Colombia would reach 10% by 2026 and 11% the following year.
Bain estimates that over the next decade software companies and major technology companies such as Google Pay, Apple Pay, Mercado Pago, among others, will take a significant share of volume and revenue with electronic payments in many marketsstrongly displacing the more traditional players, in more extreme scenarios.
But the panorama is not defined because in the face of the competition of the actors, more than 80% of current payment revenue could change hands in the next few yearswhich for the consultant has implications for competitors in the sector.
“Reduced liquidity has leveled the playing field and both incumbents and insurgents must adapt their strategies. Issuing banks can build defenses against big tech companies by investing more in user experience.”said Antonio Cerqueiro, Partner at Bain & Company.
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He added that those banks “They must prepare to operate with immediate account-to-account payments and process payments across different systems or rails, protecting loan flows, even if it means cannibalizing card transaction revenue. For card franchises, the challenge will be to develop and expand services beyond simple transaction processing and eventually become agnostic to work with all types of payment rails.”.
The firm says that with the financial industry it identified four key areas for the various players in the market: a forward-thinking strategy, sales and marketing highly targeted at technological transformationnot just selective cost reductions and adjustments.
The BNPL (Buy Now, Pay Later) payment system has gained strength, especially for electronic purchases. Mexico (2.1%), Colombia (1.7%) and Chile (1%) are the countries in the region that most present this type of transaction and it is expected that by 2026 they will reach 5.3%, 4% and 3% respectively.
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Platforms like Mercado Libre and Rappi built instant payment apps as part of their initial business scheme, but the rapid growth of these applications created an ecosystem of payments that forced firms to unlink payment methods and converting them into independent financial entities.
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