A new world for recurrence (or how to keep users actually using apps)

Recurring payments are a huge trend in Latin America. Get ready to discover this new universe for digital commerces in the region.

João Paulo Notini
December 02, 2021
8 min read
Recurring payments are a huge trend in Latin America

Recurring payments are a huge trend in Latin America. Just a few years ago we wouldn’t imagine that so many services would be available through apps and subscriptions. So how’s that happened? What are the new solutions that are enabling this trend? Which strategies have been adopted to keep users active in an app and increase performance?

In order to answer all these questions we spoke to experts from Spotify, Mastercard and Mercado Pago.

Get ready to discover this new world for recurrence!

Latin America: a sweet spot for recurrence

From streaming services to gaming companies, many subscription businesses from different industries are benefiting from this new world for recurrence in Latin America. However, recurring payments was only possible for a long time through credit cards. Thus, for a region where access to credit and credit cards is something very difficult (more than a half of its population is unbanked), new payment solutions had to emerge.

The popularity of recurrent payments started to gain traction with the boom of fintechs in the middle of the last decade. According to Daniel Pakuschewski (Head of Payments for LATAM at Spotify), debit cards played a crucial role in increasing recurring payments, but alternative payment methods (APMs), such as cash vouchers and e-wallets, gave it a boost.

Amplify your customer base in Latin America with Alternative Payments

For Daniel, APMs were always a great way to promote access, but ideal for recurrence. Besides lower conversion rates than cards, most of them do not secure recurrent payments automatically.

Tiago Dias (VP of fintech enablers for the Latin America and Caribbean region at MasterCard), strengthens this argument. He stated that the convenience of signing up for things, such as having your grocery delivered periodically in a set time and date through a recurrence model, is fantastic.

The enablers of this trend

According to Daniel, Spotify subscription started to be more accessible because of Boleto Bancario (a voucher payment can be used in two ways either physically or electronically in Brazil), OXXO (voucher payment widely used by Mexicans to pay for their utility bills and online purchases), and debit cards.

Nowadays, from Daniel’s point of view, alternative payment methods (APMs) are driving a revolution of recurrence payments in LATAM with more features. This is what has been happening with digital wallets, real time payments, and micro lending solutions such as BNPL (Buy Now, Pay Later), which might close the gap between underbanked consumers and streaming services in the region.

Read also: BNPL and e-wallets are both payment solutions that have been changing the Latin American consumer behavior. Thus, it is time to say hello to them!

The potential of PIX (Brazil’s instant payment system), for example, is an interesting case. The Brazilian Central Bank (BACEN) plans to launch a scheduled payments feature in the first half of 2022. It will work similarly to automatic debits and there is a huge expectation that it will replace installment solutions which will represent a disruption for businesses that depends on recurring payments.

Finally, another enabler of the booming recurrence market in LATAM includes the extra credit given by issuers for small tickets not to break the recurrence, which ended up being a game changer not only for Spotify, but many other companies to support their models with high approval rates.

Tiago Dias declared that MasterCard’s program for small tickets, for example, was designed to be an alternative to credit, debit or prepaid cards, while enabling banks, lenders, fintechs and e-wallets. He states that the corporation launched its installment platform, tapping into the brand new BNPL market. By doing so, it brought to consumers a flexible way to pay either online or physically, through equal and interest free installments.

The program’s success included not only the unbanked population, but also the new generation, becoming an alternative to credit, debit or prepaid cards. Thus, for Thiago, solutions that align consumer protection, responsible data, besides a lot of transparency on the fee side (which is the greatest demand of the new users generation), explains why disruptive fintechs are so successful.

BNPL, recurrence and the dematerialization of cards

The essence of subscriptions is being an installment plan, according to Tiago. Nowadays, in Brazil for example, there are two ways to pay for a subscription service. One is a recurring transaction where the customer needs to pay manually a specific amount every month until it pays for the full subscription amount. The other way is to approve one single transaction with the total amount of the plan where the customer can opt for the traditional non-interest fee installments model.

Both ways depend on the card’s approval, in terms of credit limit, etc. However, Tiago sees the BNPL as an alternative to the second one, since some people can have more credit limit problems in approving one full amount single transaction that will for example be divided in 4, 10, 12 months.

Through a BNPL solution the shopper can buy goods on credit and pay for them later in a transaction that can be a regular interest-free installment or after an interest-free period, without compromising his/her credit. Hence, Tiago believes that subscriptions, recurrent payments and BNPL are all connected in terms of enabling access to credit, products and services that people wouldn’t be able to have otherwise.

Moreover, according to Tiago, a trend to dematerialize cards has taken place. People don’t want to carry cards in their wallets anymore. It started with no cash, and now it has started with no physical cards. The access to Apple Pay, Google Pay and now even through the customer’s bank app, which can be token connected to the merchant a customer wants, has driven a new reality in LATAM.

Retaining customers and maximizing performance

Conquering the hearts of users to make them stick to an app or guarantee recurrent payments is not easy. So, in order to explain how businesses that rely on recurring payments in LATAM have achieved success, we took a look at two players: Spotify and Mercado Pago.

Spotify was launched in LATAM in 2013 by entering the Mexican market. The company, nowadays, is the world’s largest audio platform and one of the most successful stories of the recurrence industry globally. By 2020, Spotify had 345 million monthly active users worldwide, with 22% being accounted for in LATAM. The company, moreover, is processing payments in all countries of the region.

Daniel states that to maximize their performance and reach this high penetration, Spotify had to be really creative. Besides understanding the local culture and applying a hyper localized leadership strategy, the game changer was providing its subscribers a seamless payment experience, and going beyond the credit card, boleto or OXXO.

Among other players in Latin America developing solutions to tap the recurrence market, is the digital wallet: Mercado Pago. The wallet works as a financial arm in a digital bank app of the Latin American e-commerce MercadoLibre and it has proved to be very successful.

Patricio D’amato (Senior Director Point at Mercado Pago) has a strong opinion about the digital payments era: it is happening now and companies must follow the flow. Mercado Libre, which is the number one e-commerce store in LATAM (it has over 50 million active users across the region), has around 75% of all purchases made through their user’s mobile app, which is a practical example of this trend, according to Patricio.

Mercado Pago came to support this mobile payment need and it has been used for payments in both physical and digital ways. Besides that, subscribing for its service gives access not only to discounts on shipping, but access to partners, including the streaming services Disney + and Starplus. The subscribers can also get discounts and cashbacks, which turns out to be very attractive.

This partnering trend between services has been happening all over LATAM. Streaming providers are partnering with local telecom companies to use their billing and collection processes while creating a bundle offer that includes subscriptions at lower prices which consequently increases their customer’s base.

Examples of this trend can be seen in Mexico, where HBO joined forces with At&T; Costa Rica and Honduras, where Paramount + partnered with a local telecom, and Disney + which teamed up with several telecom operators in Argentina and Brazil.

Finally, another trend that is increasing retention and maximizing performances is the adoption of tokenization to allow recurring payments. Initially adopted by credit cards, tokenization is basically a generated token code that enhances transaction security and allows recurrence with good approval rates.

The tokenization that has been adopted by Mercado Pago and even Nequi (in Colombia) happens outside the traditional banking system. Through fintechs, the companies can give access to the underbanked or unbanked population and consequently increase their customer’s base.


This new world for recurrence in LATAM represents more enablement to the market. Many APM’s are boosting recurring engines, including digital wallets, PIX, and BNPL solutions. These are game changers for credit and promote the disruption of recurring billing.

At the end of the day, businesses must be creative. We have at one side more access being given to people in terms of products and services that they wouldn’t have otherwise, and better user experiences being delivered that results in more retention and better performance rates.

Now, after this deep dive into this new world for recurrence in Latin America, how about having a complete overview at the other trends in the region? Don’t miss our 2021-2022 Beyond Borders Study: How digital payments and e‑commerce are gaining traction in Latin America – free study!

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

Our annual study is out! Beyond Borders 2022-2023

Beyond Borders 2022-2023: How digital payments and e‑commerce are gaining traction in Latin America

EBANX solution for gaming in LatAm: how it works

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