Latin America is far from being a cashless economy. Even during an unprecedented pandemic that forced millions of people to stay home, cash-based methods proved to be very relevant for digital commerce in the region, and represented up to 20% of e-commerce volume in 2020, according to the study Beyond Borders 2020/2021, by the fintech company EBANX.
New payment methods such as digital wallets have advanced in the region’s e-commerce, according to AMI (Americas Market Intelligence), one of the partners of the study. E-wallets had a 32% growth rate in Chile and 20% in Colombia, pushed by smartphone penetration and the distribution of emergency aids through digital accounts. In Brazil, they represented 12% of online purchases in 2020.
Debit cards were also a highlight in Brazil’s e-commerce: driven by a new authentication protocol and also by emergency aids, they had a 16% growth rate this year. In Mexico, bank transfers had the most expressive growth rate: 20%. Despite this, cash based-methods proved to be still very relevant in LatAm and represented up to 20% of online purchases during the pandemic.
In Mexico, for example, OXXO, a widespread cash-voucher that can be paid in more than 17,000 stores across the country, was the third most relevant payment method in 2020. In Colombia, cash vouchers grew up by 17%, and in Brazil, they added up to USD 16.3 billion in online purchases, or 15% of the market’s total volume.
“The numbers revealed by Beyond Borders prove, once more, that localisation is key to seize Latin America’s potential in e-commerce. These consumers are getting used to new digital payment methods, but when it comes to convenience and trust, they point out to local payment methods, like cash vouchers, as the most reliable ones,” said Juliana Etcheverry, director of Expansion LatAm and Strategic Partnerships at EBANX.
These traditional and widespread local payment methods also grew in international e-commerce: in Brazil, for example, 68% of consumers mentioned boleto bancário as their preferred payment method for cross-border purchases, according to a survey conducted by Beyond Borders 2020/2021.
A deep dive into EBANX’s data, also compiled in the study, revealed that in 2020 there was a growth of cash-based methods in some countries where EBANX operates, processing payments for global companies such as AliExpress, SHEIN, Uber, Spotify and Airbnb (both in a partnership with Worldline).
In Brazil, for example, cash-based payments went from an average of 20% to 30% of total TPV throughout the year. “We can relate this growth to the economic uncertainty we are living right now. Many people do not want to use their balance limit, and many people are having more trouble to access credit right now. So besides a cultural preference, cash-vouchers are a necessity to many,” added Etcheverry.
Growth forecasts
Overall, e-commerce in Latin America is expected to grow by 8.49% in 2020 and accelerate 19% in 2021, becoming one of the fastest-growing markets in the world.
Based on data from the main players in the sector in a partnership with AMI (Americas Market Intelligence), in addition to a survey with 3,280 consumers in the region and internal EBANX data, Beyond Borders 2020/2021 was dedicated to understanding the impacts of Covid-19 on online purchases in the region, with focus on four Latin American countries: Brazil, Mexico, Colombia, and Chile.
As stated by the study, 52 million people in Latin America will buy online for the first time during the pandemic, increasing the number of online consumers by up to 30% in some countries – a jump that, under normal conditions, would only be achieved by 2022.
Social isolation measures adopted throughout the year, in addition to emergency aids paid by local governments through digital accounts, helped to boost the online market.
