Latin America is renowned for its romance, and that also encompasses the world of finance. According to some, 2022 is shaping up to be a year of greater passion for digital payments in this fascinating region.
Although it’s like Europe in which dozens of sovereign nations border each other, the region has no EU-like entity smoothing cross-border trade issues and no single currency, letting businesses innovate digital ways to trade between unique markets and cultures.
In this environment, payment orchestration is having a powerful impact, helping local retail startups, FinTechs, small and medium-sized enterprises (SMEs), micro-businesses, and consumers connect with digital ease and disrupt traditional cash-dependent economies.
“There are markets or pockets of markets around the world where people might be worried about the recovery from the pandemic and its impact on digital commerce, as in Latin America the rocket has left the launch bay and she moves, Quickly vice president of solution and success Daniel Scagneli said PYMNTS.
He said 2022 is shaping up to be a year of significant change for digital payments in Latin America. Spreedly’s own business in the region grew 100% year over year from 2020 to 2021.
“The reality is that because of its nascent nature and part of the monolithic banking culture with total control historically, we’re starting to see the chips being taken out and the cracks in that armor,” Scagnelli said.
Payment orchestration platforms like Spreedly facilitate this burgeoning digital democratization of finance by optimizing business drivers, ensuring payment success rates, strengthening partnerships, and reducing regional issues, such as gate delivery. entry points for large unbanked populations.
Painting these regional trends with brilliance, The Accelerating Time To New Markets Playbook, a collaboration between PYMNTS and Spreedly, has found healthy markets despite the global health crisis.
According to the latest Playbook, “The use of digital payments grew by approximately 59% in Colombia between 2020 and 2021, for example, with 1.6 million consumers in the country having downloaded and activated digital wallets for the first time in during this period. This trend towards digital and mobile payments is mirrored across the region, with consumers making 10% more e-commerce purchases through a mobile app year-over-year in 2021.”
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Saying that there is an “almost inverse relationship between the unbanked and the use of digital media,” Scagnelli said LatAm is on the verge of a digital commerce revolution.
Noting that smartphone penetration is over 80% in much of the region, he said, “Especially with COVID as a driver, [we see] people moving from unbanked to banked. Digital is an easy and fast entry point for frictionless payments for consumers in these markets to start paying. »
Success here depends on understanding the changing terrains. As he said, “The players in each of these countries are different, from banks to [payment services providers] and payment methods. People need to be aware and think strategically about how they address some of these challenges. »
Spreedly’s customers in the region run the gamut from online markets to anti-fraud solutions, the latter of which are crucial in a conglomeration of new-to-digital markets.
Using the example of the LatAm e-commerce platform Moon, Scagnelli said, “One of the struggles they had was the high fraud rates, along with false refusals and low success rates. By working with us, connecting the different sides of the market we have access to, we are able to help them not only grow, but also reduce false declines from 40% to 5%. It’s enormous.”
This was achieved using technology from another Spreedly client, anti-fraud solution provider ZeBrands, whose services and others like it secure LatAm digital commerce expansion.
See also: Spredly announces 100% growth in Latin America
The Power of Endpoint Aggregation
Among the growing use cases for 2022 is greater orchestration to simplify and streamline system throughput to deliver consumers the speed, security, and digital experiences they demand.
“Some of those use cases are things like endpoint aggregation, and it’s not just across gateways and [providers]. These may be acquirers or other third-party terminals such as anti-fraud services [in LatAm, such as] ZeBrands,” he said. “There is expansion, and how do you enter new markets through payment orchestration? The ability to strategically test or, for B2B organizations – merchant aggregators, in particular – how do they facilitate a frictionless onboarding experience? »
The answers to these questions are being formulated in real time by FinTechs growing in the region or looking for partners to enter and exploit LatAm’s growth potential.
Along those lines, Scagnelli said, “I don’t suspect there will be a slowdown, at least over the next two to three years, of this conversion from unbanked to banked, along with continued growth in usage. credit cards as a means of payment, as well as mobile and other channels.
“It’s more about how do you choose the right strategy in this market to attach yourself to this growth and make sure you know how to navigate some of these challenges that are bound to come up?”
See also: Spreedly teams up with Visa for network tokenization in Latin America