Mastercard releases report on remittances in LATAM

Formal remittance volume in Latin America reached nearly USD 146 billion in 2022, a substantial increase compared to 2012. As per projections, 2024 is set to mark a shift toward increased speed, simplicity, and security as digital remittances begin to outpace the sending of physical cash across borders. Consumers in the region currently have increased mobile penetration, as well as high access to the internet and a decreased number of individuals who are unbanked or underbanked. This follows a period of accelerated digitalisation which led to a consistent and considerable growth of digital remittances in Latin America. Additionally, as these trends continue to advance digitalisation in the region, there is expected to be generated a total of USD 20 billion in digital remittances by 2026.

Furthermore, the growth was also supported by traditional providers enabling digitalisation and assisting new participants in the industry, including fintech, digital wallets, blockchain companies, and other technology organisations, which responded to the trends seen in Latin America in the remittances industry. These include the US – Mexico corridor representing the largest remittance pipeline globally, with a 2023 volume of USD 65 billion, while regions like El Salvador, Guatemala, and Honduras hold a high percentage of households that receive cross-border payments. In addition, in South America, inflation and political instability increased migration and remittance flows, which often leverage fintech and blockchain channels to minimise and avoid difficulties that arise when utilising the traditional system.

Even if there was a massive volume and positive impact of remittances, the industry faces difficulties that pose limitations when it comes to full digitalisation and adoption, including lack of transparency, trust and security in the system, poor digital user experiences, and slow transaction speeds. Regulatory requirements are also an issue, due to the lack of legal, regulatory, and operational consistency across worldwide jurisdictions. Mastercard also mentions that a financial exclusion gap still exists affecting underserved or unbanked communities, with the company’s report showing that more than one-third of surveyed participants stated that their families back home have limited options to access the funds they send, while one in four agree their family must travel a long distance to get the money.

Mastercard’s report underlines that, to meet consumer needs and accomplish digital advancements to enable remittance adoption, companies and providers can adapt their solutions to a cash environment, offer transaction transparency and safety while removing concerns, develop trust via regulatory compliance and digital innovation, and deliver rewards to loyal customers and financial education.

By providing its technology and solutions, Mastercard intends to allow its customers to move money and data quickly and securely. The company’s Mastercard Move, a portfolio of international money transfer solutions, enables participating financial institutions to offer their customers international payments to over 180 markets, with the service reaching nearly 10 billion endpoints globally.

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