Much has been said about Latin America and its financial environment. The region has one of the highest banking spreads in the world, and about half of the adult population is unbanked. Yet not many take a deeper look into how Latin Americans actually go about their daily lives, whether it be when doing their shopping or paying for their utility bills.
If almost half of the Latin American population is unbanked, how can the region have two of the three fastest-growing ecommerce markets in the world? How are Latin Americans paying for their online purchases? The point is that Latin Americans are a very creative lot, willing to mix conventional and unconventional payment solutions, both online and offline. Crucial to this ingenious approach are the voucher payments that are more commonly known as boletos.
Latin America is one of the most vibrant markets in the world, especially when it comes to ecommerce. Ecommerce is expanding at a pace of around 20% per year, propelled by the rapid adoption of mobile devices and access to the Internet.
Voucher payments play a pivotal role in this context. No doubt, they are the key to any business wanting to seize the opportunities that are simmering in the LATAM market. Let’s take a closer look.
Brazil and its boleto bancário
With over 200 million people, Brazil has the largest market in LATAM. Yet cash is still the most common payment method used by Brazilians, according to a 2018 research from the Central Bank of Brazil. Cash is also how a third of Brazilians receive their monthly wages.
It should not be surprising that under these conditions the boleto bancário has become a widespread payment method in Brazil. This printable voucher with a barcode allows people to pay for their purchases, utility bills, and even government taxes in more than 200,000 locations throughout the country, such as post offices, gas stations, banks, and supermarkets.
These vouchers are the ingenious solution that a broad segment of the unbanked population uses to access the financial system. Rather than a hurdle to purchases, the boleto facilitates consumption habits of consumers wanting to stay connected to global trends, even if they do not have international credit cards.
In Mexico, a convenience store chain is a crucial part of e-commerce
The red banner of OXXO is everywhere in Mexico. This convenience store has expanded aggressively over the last few years, and is now vital to the country’s ecommerce market, especially because the payment services it provides.
Just like the boleto bancário in Brazil, OXXO vouchers are a national preference in Mexico. The voucher has a barcode and can be paid at any of the 17,000 OXXO convenience stores throughout the country, with cash. This means that it is a payment method that everyone can use, even Mexicans that are unbanked. Currently, about 35% of all ecommerce transactions in Mexico are paid with these vouchers.
OXXO is not the only option available for Mexicans, though. Cash vouchers from Paynet, for example, are also widespread in the country and largely used for consumers to buy online and pay for their bills. With over 14,000 affiliated establishments throughout the country, it is another convenient option for Mexicans to use, since it allows them to receive a printable voucher that can be paid in cash at any of these affiliated places. This type of payment is trusted and accessible to all the Mexican population, and has become a preferred payment that is culturally rooted in Latin America due to factors such as fear of fraud and lack of a credit card.
Argentina has a thriving ecommerce landscape, despite economic turmoil
Even in the midst of a political crisis and a currency rollercoaster, Argentina’s ecommerce market has been thriving. Last year, ecommerce transactions grew almost 38% in the country, according to the last Webshoppers report. Nine out of ten connected Argentinians have made at least one online purchase.
Vouchers are also crucial for those wanting to tap into this markets potential, given the fact that about 75% of the adult population in Argentina doesn’t have a credit card. The long history of economic instability in the country has forged a culture of paying in cash, and many Argentinians actually prefer cash to avoid the high fees of financial institutions. Again, vouchers are an innovative solution to the financial hurdles that are endemic to the region.
The most popular voucher method in Argentina is the Cupón de Pago, accepted in over 12,000 stores throughout the country. When it comes to ecommerce, this type of payment is getting traction year in and year out, according to Cámara Argentina de Comercio Electrónico.
Colombia: Growth spurt
The third most populous country in LatAm, Colombia has been experiencing a burst of growth in technology and ecommerce. The country is home to Rappi, one of the fastest-growing startups in the region. Access to the Internet has ramped up, as well as the presence of ecommerce: the sector is growing at an average of 18% per year.
Yet only 14% of Colombians have a credit card, and those Colombians that are unbanked add up to 55% of the adult population.
Cash payment methods have been helping bridge the gap between technology and financial access. One of these payment methods is Vía Baloto, accepted in over 10,000 authorized stores in Colombia and which responds for more than half of the transactions processed by EBANX in the country.
Wrapping up
In order to seize the consumer potential of Latin America, global businesses should have the best ways to reach Latin American consumers. Acting like a local is crucial -- and adopting local payment methods, such as cash vouchers, is a very important part of this strategy.
About Henrik Nilsmo
With over 10 years of experience in commercial and product leadership Henrik Nilsmo, based in New York City, is the Chief Commercial Officer of EBANX. He is leading the initiative to further grow and expand EBANX geographical reach and footprint, especially in North America, APAC and EMEA.
About EBANX
EBANX is a payments company that offers end-to-end payment solutions for global companies wanting to expand in Latin America. Founded in 2012 to bridge the access gap between Latin Americans and international websites, EBANX operates across the entire cross-border e-commerce transaction flow for international companies. It has operations in Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador, and Bolivia, and offices in Brazil, Mexico, Uruguay, Argentina, United States, the United Kingdom
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