Latin America's new landscape

Adoption of digital wallets in Colombia has surged from 27 million⁸ active users in 2021 to around 55 million⁹ in 2023. This rapid expansion has been driven by economic growth, widespread smartphone ownership and Colombia’s historically large unbanked population¹⁰. Popular mobile wallets such as Nequi and Davivienda allow people to easily set up online accounts via their phone and then start making free digital payments. As users never have to visit a branch, it is an effective and popular solution for those previously without bank accounts.   

 Brazil is making rapid progress when it comes to financial inclusion. Today, 84 percent of Brazilians have a bank account, compared to 70 percent in 2017,⁵ which means an extra 30 million people now have access to the financial system. For comparison, the average banking rate around the world is 76 percent.⁶ An important reason for Brazil’s transformation has been the success of Pix, which enables free, real-time, account-to-account transactions between consumers, businesses and government. The system now eclipses credit and debit cards, processing 8.1 billion transactions in Q1 2023 alone, which has incentivised the adoption of bank accounts.⁷   

Debit cards now account for 81 percent of payments in Chile, the highest in the region.¹⁴ This is thanks to ever-increasing penetration of CuentaRUT, a “universal” debit card from BancoEstado, Chile’s public bank, that anyone with an identity card can apply for online regardless of income or balance.^15,16 Approximately 70 percent of the population are cardholders, and it is a major reason why tap-and-pay has notably high penetration rates in the country.¹⁷  This shift happens against the backdrop of non-cash payments overtaking cash for the first time as the dominant way to pay in the LATAM region, according to new research from McKinsey.¹⁸ 

Argentina has been innovative in digital payments (it is home to one of the leading payments providers in LATAM, Mercado Pago), and is currently seeing rapid growth in its buy now pay later (BNPL) market. The sector is expected to increase at a compound annual growth rate of 27.8 percent until 2029.¹¹ BNPL is particularly popular in Argentina as customers use installment payments to protect against high inflation. In 2023, inflation was 211 percent,¹² so being able to pay for goods in interest-free installments results in savings: it effectively allows consumers to lock in a price today which will be cheaper tomorrow. Although Argentina’s new government has committed to dollarizing the economy,¹³ which could bring down inflation, BNPL is expected to remain strong, as even if inflation is reduced, it is expected to remain high by international standards.