Financial Inclusion in Latin America Grew by 30 Percentage Points

In 2017, only 54% of the population in Latin America had some form of financial account, but that figure has soared to 85%, according to a report titled "Payments in Latin America in 2024: Technology Shapes the Future," presented by Kushki and Payments and Commerce Market Intelligence (PCMI).

During the pandemic, 97 million Latin Americans made their first online purchases and by 2026, they are projected to make international purchases worth US$144 billion. However, the region faces challenges. With about 20% of total e-commerce revenues lost to fraud, Latin America ranks second in fraud after Southeast Asia.

To counter fraud, companies are integrating facial recognition, fingerprint scanning, access codes, and two-factor authentication into payment methods. Improving digital payment procedures not only improves the entire purchasing experience but also reduces the risks linked to fraud and strengthens transaction security, according to MO. As a consequence, Latin American businesses are investing in technology, including anomaly detection algorithms, machine learning models, and generative AI (GenAI), to identify and prevent suspicious transactions.

Contactless technology is gaining ground as a preferred payment option, signaling a shift in user experience. In Brazil, contactless payments surpassed traditional card transactions in September 2023. Consumers increasingly rely on digital wallets like Google Pay and Apple Pay for transactions, reducing the need for physical cards. However, cash remains predominant in stores, highlighting resistance to technological adoption.

“AI and open finance are the most important next-generation technologies that are currently inspiring leading companies in Latin America and the Caribbean to transform their operations, modernize their internal infrastructures, and provide data-based personalized offerings at lower costs,” reads Visa’s Innovation Index study. These technologies, along with blockchain and real-time payments, are driving digital transformation in the region, as 75% believe that AI and open finance will revolutionize their operations by 2024.

AI generative tools are being increasingly used for automation, fraud prevention, code writing, and content generation, offering efficiency and customization. Meanwhile, open finance facilitates secure data sharing across the financial ecosystem, enabling personalized commerce experiences based on data insights.

Blockchain innovation, including smart contracts and tokenization of real-world assets, is poised to transform commodity trading and banking operations. “Cryptocurrencies will continue to be relevant, and more businesses and merchants are likely to accept cryptocurrency payments. Traditional financial institutions will also explore ways to integrate cryptocurrencies into their offerings,” writes Daniel Guzman Salinas, CEO and Co-Founder, Conecta, for MBN. 

Visa’s study predicts that within the next two to seven years, the region will shift towards digital value networks facilitated by real-time payments (RTP), enabling instantaneous and interoperable transactions involving various forms of digital value. RTP networks and peer-to-peer (P2P) wallets are spearheading the modernization of payment systems in Latin America, with 29% of respondents recognizing them as the primary payment trends of interest.

"Our region's innovation ecosystem is flourishing with transformative technologies aimed at providing unparalleled value for traditional businesses and new players alike," says Romina Seltzer, Senior Vice President of Product and Innovation, Visa Latin America and the Caribbean.