2023 to Bring Many Possibilities for Payment Solutions

A study by Kushki and Americas Market Intelligence suggests that 2023 will be a record year for new payment solutions in Latin America. The use of cash in the region has fallen to 36%, while credit cards are positioned as the primary means of electronic payment, representing 50% of e-commerce transactions and 20% of payments at a point of sale. Mexico is attracting more international non-bank acquirers, which suggests a more open perspective on payment solutions. 

For the first time in history, cash is not expected to be the main payment method in Latin America due to the digitization of payment systems in the region following the pandemic. Access to a digital account is now extensive, surpassing 90% in the Brazil, Argentina, Chile and Colombia markets, according to the study. Meanwhile, financial inclusion still has much room for improvement in Peru, Mexico, the Andean markets and Central America. However, large strides have been made since 2019. Today, over 80% of those in Latin America have access to a deposit account, making them part of the digital financial economy. “We expect technological innovations to continue in 2023 and at Kushki, we are convinced that we will see breakthroughs in interoperability, omnichannel, mobile payments, digital wallets and contactless technology,” says Gabriele Zuliani, Senior Vice President of Market Development, Kushki.

Consumers have more choices in the market than ever regarding payments. With cash now in the minority, the adoption of digital payment methods is forecasted to continue, making it the ideal time to invest in quality and value. According to Kushki’s report, the industry’s major trends in 2023 include interoperability, contactless technology and P2P payments.

Interoperability: 

Interoperability opens up exclusive networks so merchants and consumers can have more choices, which forces market players to compete, reducing prices, increasing quality and incentivizing innovation. Yet card network interoperability still needs to be fully realized. Mexico, Colombia, Argentina, Peru, Uruguay and Guatemala still operate under card processing duopolies. By 2023, non-bank acquirers and PSPs are expected to help increase the choices available and provide the solutions merchants require. 

“Innovation for markets is fostered when new players enter to participate alongside traditional acquirers, and these bring world-class technology and new service standards. Interoperability invites the development of neobanks and super apps and allows digital service providers to integrate payments into their ecosystems easily,” says Zuliani.

Contactless Payments: 

Contactless payment technology is one of the most widespread trends in Latin America thanks to its security, convenience and instantaneousness. However, the implementation of contactless payments requires issuers and acquirers to invest in hardware, which has made some resist the trend. By 2023, contactless transactions are expected to account for 35% of all transactions in the region. Contactless technology has helped cards keep their edge over the past five years, and the advance toward a hardware-free card payment experience will support this going forward.

P2P Payments: 

The P2P payment platforms, which increasingly function as neobanks, are key to driving financial inclusion penetration above the 80% threshold in many markets. Thanks to their ease of access, low cost and inclusivity, these platforms are redefining the definition of digital payments and blurring the lines between e-commerce and in-person payments at the bottom of the pyramid. 

Digital payment media trends are in their record year in Latin America and are expected to continue growing during 2023. To continue expanding, the sector will have to overcome interoperability issues and improve the quality of products, while the governments will have to promote a more competitive, inclusive market that serves digitized consumers.