Why are Installment Payments a trend in Latin America?

Installments are transforming lives in Latin America, making technology more accessible and raising living standards. Discover the concept and benefits of this payment method as we explore its remarkable impact on the region’s digital commerce in this blogpost.

João Paulo Notini
July 07, 2023
4 min read
installment payments in Brazil

Picture that: in Brazil, smartphones cost around two and a half minimum wage salaries, making them unaffordable for many. Surprisingly, 66% of households in Brazil own a smartphone. Similarly, a high-quality TV costs approximately two minimum wage salaries in Mexico. Despite this, 91% of Mexican homes have a TV. How’s that possible? Thanks to installment payment methods.

Installments have been crucial in granting broader access to technology and improving living standards across Latin America. By breaking down the costs into affordable monthly payments, installments have empowered households to enjoy the benefits of modern products without financial hardship.

Eager to learn more about the power of this payment method? In this blogpost, we will show you the concept, its benefits, and how it became a massive trend in the region’s digital commerce.

What is installment payment?

Installment payments are a payment plan applied to purchases made with a credit card for online and offline purchases. Instead of paying the entire amount upfront, consumers can make regular payments, usually monthly, until the total amount is fully settled. Interest fees are generally not applicable, but they can happen.  

Since the 1980s, when installment payment plans emerged, they became a cultural preference in Latin America and a great need during economic crises or times of restricted cash flow in the region. 

Nowadays, among other payment trends in Latin America, installments are relied upon to purchase high-value goods like jewelry, electronics, and travel. Yet, consumers don’t necessarily look at the price tag but if an installment plan fits in their monthly budget when making their purchase decisions. 

Payments and Latin America, white paper.

Latinos’ love for online shopping and installment payments

Latin America consolidated as the second region with the highest global growth in the e-commerce index. The projection is 30% per year until 2025, an acceleration comparable only to Asian markets, according to the Beyond Borders study. The increase in technologies and internet use reveals diverse expansion opportunities, especially for international companies.

Due to this fast-growing consumption and online shopping preference in Latin America, installments are a vital payment method. According to EBANX, 60% of its digital commerce merchants’ sales are performed via installments.

When analyzing the installment preference across the region, Brazil is the leader in installment payment adoption, followed by Mexico, as per EBANX internal data. Furthermore, travel, e-commerce, and SaaS are the industries where installments are crucial for leveraging sales.

How do installments favor cross-border transactions?

Despite fostering digital commerce transactions, installment payments have facilitated cross-border transactions within Latin America, enabling businesses to expand their reach across different countries. Consequently, it opened up new market opportunities and fueled international trade, contributing to economic growth in the region.

Installments empowering consumers 

Latin American consumers often face financial constraints that make it challenging to make significant purchases outright. Installment payments allow them to spread the cost over a specified period, making expensive items more affordable and accessible. 

By breaking down payments into smaller installments, consumers can manage their budgets more effectively, increasing purchasing power.

Installments empowering businesses

Despite leveraging their customer experience, merchants offering installment payments improve their sales and maximize revenue. 

According to EBANX’s internal database, the average ticket value increased by 370% for retail merchants in Mexico, offering payments divided into 12 months, and a retail merchant in Brazil reached 200% growth by offering an installment plan of up to 6 months. 

Discover other prominent payment methods in Latin America 

Installment payments have emerged as a cornerstone of digital commerce in Latin America. The financial flexibility they provide and the region’s growing consumption have led to their widespread adoption.

However, for any business willing to expand in the region, understanding the payments landscape and learning more about the market potential is mandatory. To help you leverage your knowledge, we have prepared a white paper delving into Latin America’s market and most prominent payment methods. 

Ready to grasp the latest data and critical information for your business expansion in Latin America?

[Access the white paper]

João Paulo Notini
João Paulo Notini
Senior Content Marketing | Cross-Border operations at EBANX

EBANX Retail & Marketplace Solution

It’s time to enhance your retail marketplace in Latin America with a tailored approach to payments.

Report: Gaming in Latin America

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