Long-term strategy for the digital payments’ transformation in Latin America

A step-by-step on how to build a long-term digital payment’s strategy in LatAm and win in the region.

João Paulo Notini
March 30, 2022
11 min read

Latin America (LatAm) has been receiving an avalanche of capital investment in recent years. This movement is an indicator of change, not just money, and has opened the doors to global businesses of all kinds. Digitalization has also come to stay and, when it comes to payments, major changes have been occurring. 

Thus, if you are planning to win in LatAm, building a long-term strategy for digital payments in the region is mandatory, and here we are to show you how. We have listed seven steps that we highly recommend being followed. Throughout this article, you will see the pathway for a sustainable digital payments’ transformation strategy, and will be able to retrieve relevant information about the Latin American payments landscape. 

1) Identify potential markets for growth and expansion

LatAm definitely has a lot of opportunities for global tech companies, and the numbers don’t lie. Americas Market Intelligence (AMI) reports that e-commerce in the region is expected to have a 31% annual growth until 2024. By that year, the market would be generating a volume of around USD 611 billion. Forecasts have also predicted that by the end of 2022, customer expenditure will achieve 103% of what it was in 2019, since consumers have truly embraced e-commerce after COVID-19. 

Considering that digital payments are intrinsically related to e-commerce development and vice-versa, the first step for a long-term strategy in digital payments relies on identifying potential markets for your business. So, here goes the growth rates reported by AMI, when we look at the main economies in the region: 

  • Brazil: 30% growth in its e-commerce market by 2024
  • Mexico: 27% growth in its e-commerce market by 2024
  • Colombia: 21% growth in its e-commerce market by 2024
  • Argentina: 32% growth in its e-commerce market by 2024
  • Chile: 28% growth in its e-commerce market by 2024
  • Peru: 42% growth in its e-commerce market by 2024

You must, however, be careful with these numbers. Remember that a market which is attractive for a SaaS company, for example, may not be a good opportunity for a streaming service provider. Every country has its own cultural, political and legal specificities, as well as consumer preferences. Ultimately, all these factors make a market’s potential a variable across different business segments. 

2) Understand your audience’s wants and needs

Finding your audience’s wants and needs requires a lot of research and goes beyond payment preferences or shopping behaviors. As we have mentioned earlier, LatAm countries are not one single thing and, if you are trying to focus on a region-wide strategy, you will probably fail. What is the solution, then? Invest on a user-centric approach with localized strategies.  

A Deloitte study has proved that a client-centric business is up to 60% more profitable than competitors that don’t adopt this approach. So, when a company wants to have their clients at the core of their business, they must also localize their strategies. 

When we talk about localization, this is more than just translating your products and services to the local language, but to understanding the cultural context, economics and many other factors. Note, for example, that there are different main commercial dates among Latin American countries – such as the Hot Sale in Argentina and Carnival in Brazil – or even differences in regard to the number of annual vacation days – being 6 in Mexico, 15 in Chile and 22 in Peru.  

Hence, localization goes from products/services, to marketing campaigns and customer support. At the end of the day, you will need to play locally. 

“It is not only a language barrier; there are cultural obstacles. If you are ignoring this, your audience will be missing you. It’s not just translating. It’s geolocalization and customizing”, stated Allan Cardozo, UX Leader at Mercado Libre, during an interview to LABS. 

Having a customer-centric approach is definitely vital, but there are some similarities among all LatAm countries when it comes to payments and the purchase journey itself. First, several nations in the region share an increasing digital savvy, smartphone-addicted and younger consumer generation which is into digital payments. 

These phenomena are boosted by the increasing internet and mobile penetration in the region. According to a GSMA study, the region has 93% of mobile broadband coverage and, by 2025, mobile penetration is expected to reach 73%, while smartphones will account for 80% of all internet connections. 

Another trend, which is evidenced in our 2021-2022 Beyond Borders, is that buying nationally and internationally is finally getting connected. Customers began to expect a simple and unified purchasing journey, even if they add both, national and international products at the same cart. This represents the beginning of the concept of having a single checkout.

Finally, there is a major pain point that is common to Latin American markets: the consumer hardship of accessing digital services. Why? Due to the lack of creditworthiness and low bancarization: our 2021-2022 Beyond Borders study reported that credit cards are only accessible to a third of the local population, and about half of Latin Americans are unbanked, as indicated by the World Bank. 

The bottom line is that it doesn’t matter if you have an audience that is eager to buy your products/services. If your shoppers don’t have a payment method to complete their purchases, all your efforts will be useless. So, to overcome this problem, alternative payment methods (APMs) emerged to promote access and inclusion, and are being demanded by shoppers in the region. 

“The reality is that alternative payments are fighting for a slightly less prestigious customer base. These people have embraced alternative payments because they have been locked out of the credit card and banking world.”  stated John Price, managing director and founder at AMI, to our 2021-2022 Beyond Borders study.  

Remember that every country has its own local payment methods and alternative options to traditional payments (e.g.: credit cards or cash). So, although we are not going to dig into the main local payments per country in this article, you can check another content where we have listed the main APMs in four of the largest LatAm e-commerce markets: Payment trends in Latin America’s e-commerce for 2022

3) Protect yourself and your customers from fraud

Cybersource’s 2021 Global Fraud Report has proved that COVID led to an increase in fraud attacks and companies are spending more in fraud management. When we look at LatAm, 79% of the surveyed merchants reported an increase in fraud attempts from 2019 to 2021. Meanwhile, e-commerce revenue spent to manage payment frauds had a 12-fold increase during the same period. 

The top five fraud attacks in LatAm were friendly fraud, card testing, cupom/discount/refund abuse, phishing/pharming/whaling, and affiliate fraud. So, how to protect yourself and your customers from all risks? Through a localized smart fraud prevention strategy designed for the Latin American market. 

If you are wondering how you can achieve a really efficient strategy to protect yourself and your customers from fraud, bear in mind that only following PCI standards is not enough. You must choose a payment provider that cares about security and has a robust fraud prevention solution.


In sum, look for a partner that is constantly updated about fraud trends, has a deep local market knowledge, and is able to provide a smart anti-fraud solution with first class technologies. Examples of anti-fraud features include: card tokenization, risk mitigation, risk scoring, automated chargeback disputes, device fingerprint, and much more.

4) Open-up for an ever-changing payments ecosystem

We are living in a digital era and this has a direct impact on payments. Thus, in order to develop a long term strategy for digital payments in LatAm, you will need to constantly pay attention to its ever-changing local scenario and adapt to it. 

When analyzing the payments ecosystem in the region, digital methods are the main drivers for new trends. Based on an AMI study, access to a digital account by a bank or a fintech company reached 88% of the adult Latin American population last year, which means that there is more access and inclusion happening. 

Our Beyond Borders study has also reported that from 15 economies in the region, almost 60% of LatAm’s e-commerce total volume would be paid through cell phones in 2021 – a 46% increase compared to 2020, when the mobile share reached 55%. 

Behind these statistics, APMs are one of the main pushers for payment changes, and they have been gaining ground in the region since the last decade. Digital wallets, for instance, currently represent 11% of the total e-commerce transactions volume in LatAm and have been growing 40% annually (see the chart below). Bank transfers, meanwhile, account for 7% of the total share, but are growing at a 107% rate per year, mainly driven by instant payment methods such as PIX and PSE. 

Another interesting fact is that, back in 2018, cash based payments were reigning in LatAm. They represented almost a sixth of the total online transactions volume and were the third most common payment methods in the region. The shift happened in the last years and, as reported by our 2021-2022 Beyond Borders study along with AMI, they have lost two positions in the payments ranking (see the following chart). 

Experts say that cash based payment methods will lose even more space in the next years. Even in Mexico, where cash preference hit 90% levels before the pandemic, consumers are adopting digital payments on a more day-to-day basis, with cash preference dropping to less than 50% in some scenarios, according to a survey from Banco de México

5) Adjust your legacy systems for compliance

Many global tech companies have legacy systems, which means old or outdated software/hardware that are still being used. Hence, a successful long-term digital payments’ strategy in LatAm will highly depend on adjustments or updates on these systems. Companies, this way, will be able to follow the regulations of each targeted country. 

Note that regulations may vary from country to country and are always evolving. Also, some countries have restrictions when it comes to storing customer data in foreign nations. So, although legacy systems are harder and sometimes impossible to be updated, there are organizations that rather keep using and adjusting them or simply don’t have another option.

6) Have all the data at hand and use it

Data is “king”, and will be your guide when pursuing a sustainable strategy for a digital payments’ transformation in LatAm. You are definitely able to make better decision making through data and, in regard to payments, think about all the benefits you can have. Data can give you an overview of all transactions that were made, show how your business is performing, indicate your sales numbers, improve your cash flow management, and much more. 

Although having all data in hand simplifies your business management, remember about keeping it safe. As we have mentioned previously, you must protect your business and your customers from frauds, so data leakage can be a huge problem. Moreover, you must take the proper steps to be data compliant in each country you are operating in. 

7) Learn, adjust, repeat

Last but not least, all other steps are useless if you don’t have a continuous improvement mindset. As evidenced, LatAm is a region with plural cultures and every country has its own particularities. There are, indeed, some macro trends shared by all nations that you must be aware of, especially when it comes to payment preferences. Yet, you will be more prone to have a successful long-term digital payment strategy if you keep on learning, adjusting and repeating what we have suggested here. 

EBANX as your local strategic partner

We know that executing everything that we have recommended can be quite challenging. That is why outsourcing the heavy lifting and counting with a local and experienced partner will take you a step closer to winning in LatAm. 

EBANX is an all-in-one payments platform that allows you to make payment processes more efficient, both, domestically and internationally, for you and your customers. Our solution is designed for all tech businesses that operate globally and want an efficient cross-border model to land and win in LatAm. 

Learn more about our solution and get ready to build a long-term digital payment

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.

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