As the year begins, it is time to renew the regional approach to integrate more Latin Americans into the formal financial economy.
The history of financial inclusion in Latin America is a remarkable successbut with advances as diverse as its geography.
Some countries, such as Brazil and Chile, have managed to integrate their populations into the financial system, leading to significant cash displacement.
Brazil, with a 94% penetration of digital payments in private economic consumption (PCE), It will soon become the world’s first economy to reach a notable scale in digital payments.
Chile (63%) is at the level of very advanced countries such as the United States (63%) or the United Kingdom (62%).
However, many other countries, like Mexico (25%), Peru (25%) and Colombia (17%), They still have a significant part of their populations that depend on cash.
Preparing the way for prosperity
The benefits of payment digitalization for different audiences, such as consumers, SMEs and governments, are recognized. Facing the future, MasterCard sees a great opportunity to involve both the private and public sector to reduce the use of cash and promote inclusion through digital payments through the following initiatives:
Providing access to digital payments through accounts and payment methods, such as debit cards or other alternative methods is crucial for modern economic participation. A great example comes from the government subsidies provided during the pandemic in the region. A 2023 Mastercard study revealed that 15% of respondents first agreed to a savings or deposit account product, And 9% obtained their first digital wallet thanks to government assistance during the Covid-19 pandemic.
In the Dominican Republic, the Banreservas Christmas Bono program digitized the distribution of assistance to families that, until 2020, received in the form of food baskets. Fintech have also played an important role in providing access to digital accounts in recent years. For example, Clenak announced last year that it reached the milestone of 100 million customers.
Access to digital payments is not enough.
To accelerate the transition, we must allow consumers to manage all their daily transactions – whether in physical or online stores – using digital solutions. It is essential to ensure that all merchants, large and small, accept digital payments. We must seek to replicate the best practice in Brazil, which has the largest number of digital payments acceptance points per 1,000 inhabitants, while large economies such as Mexico and Colombia have just over 20 acceptance points per 1,000 inhabitants.
Consumer -oriented experiences also play an important role in promoting use and adoption. Simple and intuitive digital interfaces, combined with reliable customer support, can significantly improve public trust in digital platforms and promote adoption. Latin American Fintech, with their exemplary experiences for the consumer, have become referents for other global actors.
In addition to offering an exceptional experience to the consumer, it is crucial to continue building confidence and security, particularly for older consumers. Recent statistics indicate that 83% of Latin Americans consider that security characteristics are the most influential factor when selecting a payment method. The important investments of the industry in cybersecurity – where many institutions have already adopted AI to prevent fraud and reinforce security, going from rules based on rules to the detection of anomalies and behavioral analysis – together with continuous investments in education of the education of the education of the education of the education of the education of the education of the education of the education of the education of the education of the education of the education of the education of the education of the education consumer, are essential to mold user behavior.
(See more: What improves and what is complicated in the country with the arrival of pension reform?)
Looking ahead, a regulatory framework that promotes competition and promotes innovation is essential to implement these best practices. By cultivating an environment that fosters innovation, regulators play a vital role in improving consumer choice, Build trust and promote technological, economic and social progress.
Andrea Serch
President of Latin America and the Caribbean, Mastercard.
