2020 has been a transformative year for many industries. A global pandemic has had a profound impact on our interactions and the way we consume products and services. Payment processors have played an important role in helping businesses rethink their strategies and create a consumer experience that adapts to the quickly shifting payment landscape.
E-commerce has experienced years’ worth of growth in just a few months as most people turn to online payment methods. According to a 2020 report, e-commerce is set to continue to grow throughout the region in the next few years. In Brazil, the largest market in the region, e-commerce is expected to grow 53% by 2023, and Mexico, the second-largest market in the sector, is projected to expand 57% over the same period.
Colombia has the fourth largest e-commerce market in the region which is expected to reach a revenue of over $6B by 2022. As one of the countries in Latin America with the highest number of internet users, Peru is also becoming an extremely promising e-commerce market with a projected value of $14B by 2022.
Times of change are often accompanied by innovation and adaptation. Certain trends have been accelerated during this period of growth and disruption in consumer habits. It will be interesting to see which trends will form part of the future of payment processing in Latin America.
Less cash and more contactless payments
While cash is still a relevant payment method in Latin America, digital payments have gained popularity with the pandemic. The use of cash has decreased over the past few months as a result of social distancing measures. A study showed that branch and ATM usage decreased among consumers and 62% reported using less cash due to COVID-19. Despite this trend, the reality is that a significant portion of consumers still prefers to use cash. Solutions that integrate both cash and online payments such as Openpay’s Paynet fulfill the needs of the business and the customers.
Contactless technology also increased by 40% in credit and debit cards according to the same study. These technologies allow customers to pay by swiping or tapping their debit or credit cards near a card reader or by scanning a QR code to pay through a payment link or a digital wallet. With the pandemic, this method has proved to be a fast, secure, and convenient way of making transactions.
Biometric authentication
This type of authentication involves verifying the identity of a person based on one of their biological or physical characteristics, which in most cases involves their face, voice, or fingerprints. Typing out a pin number or card details can become a tiresome –though necessary– step in the customer journey. However, biometric authentication can help speed up that process by using people’s unique biometrics to validate their identities and authorize transactions.
Omnichannel payments
In order to capture a broader client base, it is important to provide diverse payment options to potential clients. On top of that, about 48% of customers jump back and forth between digital and physical interactions with companies and expect to do so seamlessly. A solution that integrates a business’ different payment channels is essential for providing a positive customer experience, especially when these exchanges are taking place online. Allowing customers to pay using credit and debit cards, payment links, direct bank transfers, or cash in one integrated solution is essential for a company to remain competitive in Latin America’s growing e-commerce market.
These omnichannel solutions allow businesses to deliver engaging, personalized, and consistent interactions throughout the customer journey, and customers can pay how and when they want.
Unifying these channels also serves as a great way to capture accurate data about an individual’s consumer behavior and better understand their needs.
The future is here
Changes in consumer behavior that seemed part of a distant future have made their way into the present with the accelerated adoption of new technologies and online transactions by Latin American consumers during the pandemic. The ease of use and convenience demonstrated by these technologies are indicating that their adoption is not necessarily circumstantial, but will persist in time.
This post is also available in: Español (Spanish)
