Latin America’s financial infrastructure is undergoing drastic changes driven by regulations around instant (or fast) payments, open banking, and central bank digital currencies. Much of growth is being fuelled by mobile payments, the emergence of digital wallets, advances in technology and partnerships between traditional banks and new fintechs.

Latin America is an incredibly diverse region of 33 countries with 14 different currencies. Although the proportion of people without a bank account has been decreasing in the last decade, around 42% of adults in the region still lack access to an account.

This has created a vibrant payments ecosystem of concerted efforts to bolster financial inclusion and technological advances, focused on the evolving consumer behaviour. Below are the main trends. 

For Latin Americans, the freedom to choose their preferred payment solution is important and most consumers rely on alternative payment methods to conduct transactions. Merchants, in turn, must embrace this diversity and offer payment methods tailored to local preferences.

Digital wallets offer the required levels of convenience and security. They have been widely adopted in mature markets and are now on the rise in Latin America.  MercadoPago or PicPay are among the most popular.

Other popular alternative methods include cash-based payment systems such as Oxxo Pay or Boleto, online bank transfer payment solutions, prepaid cash cards or mobile payments such as PagSeguro in Brazil.  

Despite these new options, cash remains popular. Physical notes and coins are the most common way to pay at checkouts, partly due to the lack of access to alternatives. Cash use in Argentina is at 34%, while it stands at 35% in Brazil and 42% in Colombia. 

With consumers increasingly expecting real-time transactions, instant payments will continue to shape the future of commerce. These not only offer greater convenience and efficiency but also speed up the identification process for consumers, improve security and reduce the likelihood of delayed payment execution.

Merchants should ready themselves for the widespread adoption of instant payments. Advances in instant payments allows them to offer customers faster, more transparent payments with robust fraud protection.

There has been an e-commerce boom in Latin America in recent years, with online revenue expected to account for nearly 20% of total retail sales by 2026. E-commerce offers businesses the opportunity to expand in to other countries but Latin America does not always offer the "click of a button" foreign exchange and payment transactions that organisations are accustomed to in other markets, such as Europe. 

The high costs of intermediation, processing cut-off times and lack of interoperability between systems make cross-border trade challenging. In addition, Latin America’s fragmented payments landscape and large unbanked population further exacerbate the issue.

Despite these obstacles, 2024 has seen changes to the region, driven by regulations on instant payments, open banking and in some central bank digital currencies that are aimed at promoting financial inclusion and wider access to the digital economy. For example Brazil’s central bank has published a list of 13 ‘development themes’ for its second major phase of central bank digital currency (CBDC) experimentation, called DREX.

Infrastructure improvements in several countries are expected to boost the growth of electronic payment revenues and payment service providers are working on modernising  processing systems to enable seamless and secure cross-border transactions.