Instant Payments Reshape LatAm Banking Competition: Study

Instant payment transactions in Latin America expanded 130-fold between 2017 and 2024, settling 45% of retail digital payments and forcing banks to transition toward continuous 24/7 financial architecture. In Mexico, where SPEI infrastructure adoption faces structural limits due to informal economy prevalence, decoupling payment orchestration from legacy cores is necessary to capture flows in the US$61.791 billion US-Mexico remittance corridor. This transition impacts commercial banks, fintechs, payment clearing houses, and mid-sized enterprises requiring automated real-time liquidity and automated compliance.

——

Instant payment transactions in Latin America multiplied 130-fold between 2017 and 2024, expanding from 620 million to 79.8 billion annual operations. According to a study by banking software firm Temenos and Payments & Commerce Market Intelligence (PCMI), instant payments account for approximately 45% of retail digital transactions in the region, with projections indicating adoption will reach 60% by 2030.

The study, titled "Payment Rails in Latin America: The Infrastructure Driving the Digital Economy," incorporates field research and interviews with payments, technology, product, and strategy executives from financial institutions across seven regional markets. The findings show that while payment infrastructure has expanded rapidly across Latin America, institutional readiness to commercialize real-time networks varies significantly.

"Latin America has built significant payment infrastructure, but this report reveals that being connected to a rail is not equivalent to competing on it," said Leonardo Amortegui, Senior Solutions Consultant for LATAM at Temenos. "The gap between a connected institution and one ready to win lies in architectural decisions that determine whether rails function as strategic assets or operational burdens."

To capitalize on real-time transaction volumes, financial institutions are shifting away from traditional deposit-custody models to become active transactional service providers. Driven by central bank mandates and zero-cost consumer transfer requirements, real-time rails have created immediate network effects. However, financial institutions now face compressed fee revenues from traditional wires and cash withdrawals, forcing banks to convert transaction data into commercial intelligence and new lending products.

Regional Maturity Diverges Across Markets

Market maturity for real-time payments exhibits marked structural differences across Latin America. Brazil leads global per-capita adoption through Pix, recording 373 transactions per person annually, reaching 75% population penetration within five years, and processing US$7.1 trillion in transaction volume in 2025. In Argentina, instant transfers account for 60% of all electronic payments through the Transferencias 3.0 framework. Colombia's Bre-B system reached 87% of the adult population within six months of operation, while Costa Rica saw ATM cash withdrawals decline from 170 million in 2019 to 90 million in 2024 due to SINPE Móvil usage.

In contrast, infrastructure availability has not guaranteed equal consumer adoption in all jurisdictions. Chile remains a card-centric market where widespread debit card usage limits transfer growth. In Mexico, the Interbank Electronic Payment System (SPEI) has operated for two decades and continues upgrading toward SPEI 2.0. However, adoption remains concentrated among banked and tax-compliant users, as high levels of informal economic activity present a persistent barrier to digital onboarding. "Although SPEI has been operating for two decades in Mexico, its penetration capacity remains limited to the already banked segment," noted BanBajío executives in the report.

Real-Time Operations Expose Legacy Infrastructure Limits

The transition to instant settlement introduces severe operational frictions for institutions relying on legacy core banking systems. Traditional core architectures built for batch processing during business hours struggle to maintain continuous 24/7 availability, real-time ledger accounting, live anti-money laundering (AML) screening, and instantaneous fraud detection. Furthermore, instantaneous settlement eliminates low-cost float income derived from funds held in transit.

"When we start working with a financial institution on instant payments, we realize that other underlying services are missing," Amortegui explained. "This puts pressure on the core banking system and accounting services. Does it work 24/7? What about fraud controls, real-time AML screening, KYC verification, and liquidity management?"

To manage this operational complexity, financial institutions are increasingly decoupling payment orchestration platforms from core banking systems. This modular approach allows banks to adopt rich data standards like ISO 20022, deploy artificial intelligence for real-time fraud orchestration, and satisfy evolving regulatory requirements without undergoing high-risk core replacement projects. 

According to the study, successful institutions manage seven core operational dimensions: 24/7 automated operations, unified multi-rail orchestration, real-time fraud controls, natural-language AI integration, transactional data exploitation, multi-channel cross-border routing, and new value-added revenue generation.

Cross-Border Corridors Shift Toward Alternative Networks

As domestic instant payment networks consolidate, competitive pressures are extending into cross-border corridors, specifically remittances and small and medium-sized enterprise (SME) trade. The United States-Mexico corridor represents the world's largest remittance channel, handling approximately US$61.791 billion annually. Non-traditional entities, including fintechs and money transfer operators, now capture roughly 65% of global remittance value by reducing average transfer fees from 8% in 2016 to 3% in 2025.

Cross-border B2B trade faces similar disruption. Study data indicates that 40% of SME cross-border payments in Latin America take more than four days to settle, while fees for low-value transfers averaging US$250 reach 23.3% of the transaction value. Furthermore, nearly 90% of non-US dollar transactions are automatically converted at uncompetitive exchange rates. Non-bank providers are capturing market share by combining local instant rails, application programming interfaces (APIs), card networks, and alternative settlement mechanisms to bypass traditional correspondent banking networks.

Beyond transaction processing, real-time payment data serves as a catalyst for credit expansion. In Brazil, household loans at the base of the pyramid grew 2.46-fold in the three years following Pix's launch. Regionally, 78% of SMEs accepting digital payments report improved access to commercial credit, as cash flow history replaces traditional collateral requirements. 

The study concludes that to maintain relevance across domestic and international corridors, banks must adopt multi-rail routing architectures that dynamically evaluate cost, processing speed, and regulatory compliance. "Alternative networks create more efficient corridors, especially for exotic currencies," stated Mick Fennell, Payment Products Director at Temenos. "These alternative networks should be viewed as super-correspondents."