Mobile payments and super apps in Latin America

Juan Pablo Ortega, Rappi: 'Technology is changing how we do things every day and super apps are helping us save time that we can now spend doing what we like'

Mobile payments in Latin America have been evolving at an unprecedented rate in the last twelve months. For delivery apps like Rappi, cash is still a predominant payment method in most of the region but especially in Colombia and Mexico. Unlike its neighbours, Brazil is the only country where credit cards are widely used across customer segments – however, debit cards have been blocked by issuers for card-not-present transactions mostly due to high fraud levels. 

In the past couple of years, Colombia has seen an increase in the use of non-cash payments. This has not been the case for long, as around 70% of adults do not have a credit or debit card. The recent change has been triggered by the increase of smartphone usage and the rise of mobile apps that enable users to order food, groceries, or pay bills online. 

Big banks are creating their own e-wallets, which are integrating with the checkout flows of popular mobile apps, such as Nequi from Bancolombia (Colombia’s biggest bank). In addition, PSE (Colombia’s ACH system for ecommerce) is becoming a standard in mobile payments, allowing users to pay directly with their bank accounts. These two payment methods, the increased penetration of credit cards, and the recent pandemic have resulted in an explosive growth of non-cash payment methods.

In Rappi, cash has lost more than 42% of the market share just in Colombia, while in Argentina this trend is even more pronounced, losing 53% 2019 vs 2020-2021. Overall, when looking at the nine countries in which Rappi operates, the market share of cash is down 40%. 

As we come back to the ‘new normal’ and adjust our behaviour in a post- COVID-19 world, we expect this trend to continue and cash in mobile payments will tend to disappear at some point. It is still early to tell which will be the new preferred payment method, but we would not be surprised if cryptocurrency starts eating some of the pie. Countries like Mexico and Argentina are now seeing a more widespread adoption of Bitcoin, Ethereum, and others, while at the same time merchants are starting to accept them as a payment method. 

The rise of super apps

Super apps combine restaurants, groceries, pharmacy, and convenience store delivery with services like ridesharing and financial services – in other words, a do-it-all app. This model has proven to be attractive, especially in emerging markets were people have basic smartphones with little storage capacity on them – having a single app that can solve for all their needs is changing the way people consume. Super app’s only prerequisite is that it’s in need to seamlessly integrate multiple services into one single app that shares onboarding, checkout, and payment to facilitate the customer journey. Super apps around the world have been a contributing factor in the shift from cash to cashless. 

WeChat in China, for example, became one of the most popular payment methods, displacing cash completely. Today, in China people pay for everything with either Alipay or WeChat Pay.

LATAM’s super app

In Latin America, at Rappi we are building the fastest-growing super app of the region. With Rappi, you can order food from your favourite restaurants or products from the grocery store, and you can even get a credit card, which takes less than five minutes, and receive a physical card in less than one hour.

Rappi decided to start offering financial services in order to streamline one of the most important steps in the customer journey: how users pay. We were sure that by using technology financial services could be faster, cheaper, and more realisable compared to current, traditional solutions. We already launched our credit card in Mexico and will soon launch it in Brazil, Colombia, Peru, and Chile. Our credit card is 100% digital, except the physical card that closes the gap to the physical world – the application, KYC, and onboarding are done through the Rappi app. The user gets a digital card instantly, and we even provisioned the card in Rappi so that they can start using it right away. We are also working on a new service called ‘Paga con Rappi’ (Pay with Rappi) that will enable all of our users to pay on different websites or mobile applications utilising their registered payment methods, without having to input their card and personal information or without the need to sign in.

We are living through existing times; technology is changing how we do things every day and super apps are helping us save time that we can now spend doing what we like. Payment methods in the region will keep evolving, and we expect that new technologies will make paying so easy that it will become second nature.

This editorial was firstly published in our Payment Methods Report 2021 – Latest Trends in Payment Preferences, which depicts an overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.

About Juan Pablo Ortega

Juan Pablo Ortega is a Co-Founder of Rappi, Latin America’s largest and fastest-growing on-demand platform and one of the region’s ‘unicorn’ startups. As Co-Founder, Juan Pablo has played an instrumental role in taking the company from being a small team food delivery startup to becoming one of the region’s largest, multi-functional digital platforms with operations in nine countries and a valuation of approximately USD 3.5 billion. Juan Pablo started Rappi’s rapid international expansion by launching in Mexico and then built and scaled Rappi’s Payments and Fraud teams and capabilities while architecting the buildout of Rappi’s financial services arm – starting with RappiPay. RappiPay offers Rappi users a variety of digital payment functionalities, including in-store QR payments, P2P, and bill payment services, as well as a contactless-enabled Visa debit and credit card. 

About Rappi

Rappi is Latin America’s ‘everything’ marketplace super app. Rappi operates in 220 cities across 9 countries. Today, Rappi has over 150,000 couriers and has worked with over 140,000 merchants in the region. The platform boasts more than 64 million users in Latin America. Rappi has been defined as the Latin American super app and one of the fastest growing companies in the region.