Voice of the Industry

Digital renaissance in Latin America: a deep dive into the region's ecommerce industry in 2022

Friday 24 June 2022 10:36 CET | Editor: Raluca Constantinescu | Voice of the industry

Karina Mata Farina, Head of Marketing at BoaCompra by PagSeguro, elaborates on the main trends, opportunities, and challenges in the 2022 Latin American ecommerce and payments landscape.

As the local economies recover from the pandemic and online shopping becomes a daily habit for more and more Latin American consumers, the region presents huge opportunities for merchants that know how to make the most of LATAM’s markets. 

If it was already true that Latin America is a fast-paced market when it comes to technology, the ‘new normal’ made it even more clear: after the pandemic, LATAM highly accelerated the digitisation process it was going through, turning ecommerce and consumption of digital goods into region-wide preferences. On the heels of that comes payments innovation: from e-wallets to digital payments, Latin American consumers are becoming more and more mobile-first. 

What does this mean for companies? How permanent are the changes that the pandemic accelerated? What is the role each local payment method plays in this context? After all, they range from the decaying, but still very popular cash-based methods to disruptive instant payments. And how can foreign merchants better understand this market and its opportunities? 

Fifty million Latin Americans shopped online for the very first time in 2020. Another 51 million did it in 2021, thus bringing ecommerce penetration to 67% of the population. Latin America’s ecommerce market reached USD 268 billion in 2021 – and it is expected to be worth USD 646 billion by 2025. This and other exclusive data have been shared in BoaCompra by PagSeguro’s recently released white paper Digital renaissance in Latin America: a deep dive into trends, opportunities, and challenges in the Latin American e-commerce industry, conducted in partnership with Americas Market Intelligence (AMI). In the study, we provide exclusive insights and up-to-date information about this exciting, fast-rising market. 

Focused on the six leading markets of LATAM (Brazil, Mexico, Chile, Colombia, Peru, and Argentina), the white paper was written based on internal AMI data and public sources, besides in-depth interviews with cross-border merchants and local players from the above-mentioned countries in multiple industries, including retail, video and music streaming, gaming, travel, and B2B digital goods providers. 

Expertise to boost business in LATAM 

Our goal with the study was to share some of the expertise we’ve built during our over 17 years of providing local payment methods for foreign merchants selling to LATAM. During all these years, we watched closely how Latin America became more and more digitised, how open customers are to innovative payment and shopping experiences, and how much digitisation is an ongoing trend that goes further each day without stopping. 

After all, nowadays, Latin America has an average of 77% both in internet and smartphone penetration, and these users are looking for smooth, agile experiences in the palm of their hand. So much so that mobile purchases, now representing 65% of total online shopping volume, grew even more than desktop purchases in 2021. It’s worth noting that most of the first-time online shoppers of 2020-2021 used a mobile device for their initial purchases. 

M-commerce also grows due to the fact that Latin America still has huge inequality levels, making access to the internet difficult for a considerable part of the population. Being able to buy a smartphone and access 4G internet is easier than being able to get a fast Wi-Fi connection: in Colombia, for example, where broadband internet and Wi-Fi are very limited, ecommerce is still a possibility for the majority of the population: in the country, 70% of ecommerce volume comes from mobile devices. While internationally-enabled credit cards are the minority, local payment methods allow all consumers to shop online. 

The impact of local payment methods 

And so, we reach one of the main challenges of selling to Latin America: understanding the peculiarities and fast changes of the region. Hugely innovative, but still very unequal; home to some of the world’s most disruptive fintech companies, but still with a considerable rate of unbanked citizens. 

On the other hand, that is also one of the main reasons why digitisation is so strong in LATAM: with innovation comes more access. When traditional banks are not within reach, instant payment methods such as Pix can be used by virtually any adult citizen. If Wi-Fi is lacking, buying a smartphone in instalments and using it for everything – studying, working, shopping, streaming, gaming – is a possibility. When prices are high and national currencies are devalued, innovative shopping experiences and cross-border merchants come along with better product variety and more competitive prices. 

To better understand this context, the white paper details the payment landscape in Latin America – from the importance of accepting domestic-only credit cards, which account for 30% of the ecommerce volume, to the rise of instant payments, which are a type of bank transfer. Driven by the constant increase of instant payments in LATAM, online purchases paid with bank transfers are expected to go from 13% in 2021 to 21% by 2025. 

There are region-wide trends, but also different opportunities in each country. In Colombia, for example, bank transfers account for 40% of ecommerce sales, a higher amount than the region’s standard – one of the reasons behind that is the country’s low credit card penetration (16%). This highlights the major importance of offering local payment methods when selling to LATAM, since each country has its own payment preferences – and its own challenges that come with the specific regulations of each market. 

Latin America is a challenge, yes, but with knowledge, data, and expertise, it is a market very open to new merchants from anywhere in the world. If you’re already selling to LATAM, you probably already understand its potential; if you still aren’t, our white paper will help show you why it’s a good idea and how to better navigate its peculiarities, thus making the most of all its potential. 

The ‘new normal’ is here, and it’s highly digital – especially in fast-evolving Latin America. To tap into that, understanding the region and its ecommerce and payment landscape is fundamental. So, if you want to know more about how ecommerce is thriving more than any other type of shopping in Latin America and the fundamental role local payment methods play in the total ecommerce volume, click here to download the full white paper

About Karina Mata Farina 

Karina Mata Farina is Head of Marketing at BoaCompra, a PagSeguro company. She has over 16 years of experience in digital marketing, performance management, and ecommerce. Prior to BoaCompra, Karina worked in ecommerce companies, startups, and digital agencies. 

About BoaCompra by PagSeguro 

BoaCompra by PagSeguro is a local payments platform that enables worldwide merchants to accept local payments in LATAM or send payouts to Brazil. A one-stop payment solution that offers local processing in local currency with local or international set-up in 17 LATAM countries, BoaCompra is part of PagSeguro, one of the biggest fintech companies in the region and a disruptive provider of financial technology solutions driven by robust infrastructure.

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: ecommerce, digitalisation, digital payments, payment methods, local payment method, instant payments, retail, merchants, m-commerce, PIX
Categories: Payments & Commerce
Companies: BoaCompra, PagSeguro
Countries: Latin America
This article is part of category

Payments & Commerce




Discover all the Company news on BoaCompra and other articles related to BoaCompra in The Paypers News, Reports, and insights on the payments and fintech industry:

Industry Events