As a new year begins, there is a unique opportunity to renew the regional approach and work for the integration of more Latin Americans in the formal financial economy. The history of financial inclusion in Latin America has been remarkable, although with advances as diverse as its geography.
In countries like Brazil and Chile, a significant integration of its populations to the financial system has been achieved. Brazil, with a 94% penetration of digital payments in private economic consumption (PCE), is in the process of becoming the first world economy to reach a notable scale in digital payments. Chile, with 63%penetration, is along with advanced countries such as the United States (63%) and the United Kingdom (62%). However, reality contrasts in other nations such as Mexico (25%), Peru (25%) and Colombia (17%), where a large part of the population continues to depend on cash.
Preparing the way for prosperity
The Digitization Payments brings tangible benefits for consumers, SMEs and governments. In this context, Andrea Scerch, president of Latin America and the Caribbean of Mastercard, visualizes a great opportunity for collaboration between the public and private sector to reduce the use of cash and promote financial inclusion through the following key initiatives:
- Provide access to digital payments: Ensure that people have access to bank accounts and payment methods such as debit cards and digital wallets is essential. During the pandemic, digital government subsidies helped many people access financial products for the first time. For example, in the Dominican Republic, the Banreservas Christmas Bonus program transformed the distribution of assistance, from food baskets to digital bonds. Likewise, Fintechs such as Clenk have played a key role, reaching 100 million customers in 2022.
- Promote the acceptance of digital payments: It is not enough to offer access; It is vital to ensure that all shops, large and small, accept digital payments. Brazil leads in this regard, with the largest number of acceptance points per 1,000 inhabitants, while in countries like Mexico and Colombia this figure is much lower.
- Improve consumer experiences: Simple and intuitive interfaces, combined with reliable support, encourage public trust in digital platforms. Latin American Fintechs have established exemplary standards that inspire global actors.
- Strengthen security and trust: For many consumers, especially the elderly, security is a crucial factor when choosing payment methods. 83% of Latin Americans consider security measures such as priority. Cybersecurity investment, including solutions based on artificial intelligence, and consumer education are essential to prevent fraud and encourage adoption.
