Electronic payments: what they are, and the opportunities they provide to companies and fintechs

Published on Nov 21 2023.

reading time 12 minutes reading

Electronic payments are a true revolution in how financial transactions are conducted. Driven by constantly evolving technology and by the growing demand for safer and more efficient solutions, this transformation scenario continues to develop, bringing numerous opportunities for companies and fintech that are involved in the financial market.

In 2023, the percent of Latin American consumers that made payments using only cash fell drastically from 45% to just 21%. The numbers from the study by Mastercard and Americas Market Intelligence (AMI)show the rapid adoption of more modern and efficient financial solutions .

Against this backdrop, as we will see in this article, electronic payments offer new ways of optimizing transactions, reducing costs, and expanding accessibility to financial services. It is a movement that not only prioritizes efficient operations; it also opens doors to a more inclusive and dynamic financial universe.


What are electronic means of payment?


Electronic payments consist of the transfer of financial values by means of online transactions. They are understood as any type of payment that is not made using cash, such as when we swipe a debit or credit card in a store’s card terminal.

Note that although the terms are often used synonymously, there is a difference between digital payments and electronic payments.

Digital payments are a type of electronic payment in which the transaction occurs online. Digital payments, however, dispense with the use of any physical element, as information is stored on devices such as smartphones or tablets.


Reducing the use of cash and increasing the use of electronic payments


In recent years, especially after the pandemic, there was a notable change in how people make payments, with a clear preference for electronic means, to the detriment of cash. This trend has been seen in markets in various parts of the world, especially in Latin America.

According to the Global Findex 2021, 40% of Latin American adults chose to digital payments in business establishments during the pandemic, with 14% of them doing so for the first time.

Furthermore, the Mastercard/AMI study shows that prior to the pandemic, 25% of those interviewed said they had used cash for more than 75% of their monthly expenses. In 2023, that proportion dropped to 15%.

It is important to note that the decreased use of cash occurs to a lesser extent among certain groups, such as in low-income populations, individuals who do not live in large cities, and in younger people. This shows that there is still a huge untapped potential to expand the use of electronic payments.


Principal means of electronic payments


In response to the growing demand for efficiency and safety in financial transactions, means of payment have diversified and evolved. Below are some of the most relevant electronic payment services to our current reality.


Payment cards


Payment cards, commonly known as “plastic money,” play a central role in electronic payments in Latin America.

In 2020, the credit card, for example, was the most-used means of payment in e-commerce transactions in the region, totaling an impressive 59% of purchases, as indicated in the Mastercard/AMI research.

In addition to the widely known credit and debit cards, private label cards – issued by commercial establishments for exclusive use in stores that are part of their chain – are also gaining traction, as they are used to purchase specific products with a pre-defined credit charge.


Payment link


A payment link is an electronic address generated by a platform that provides this service. Through this link, the issuer inputs information such as product, amount, and number of installment payments, and the system creates the corresponding link.

This link can be shared by text message, social networks, or e-mails, sending the consumer to a page with all the details of the transaction, such as the amount and description of the product. There, the client inputs their payment information, and after confirmation, the transaction is concluded.

Thanks to its ease of use, low cost, and reduced friction during the process of finalizing a purchase, this tool has proven to be extremely versatile, being used by small, medium, and large companies alike.


Digital wallets


A digital wallet functions like an application in which the user can upload money and register their cards, allowing purchases to be made directly from their smartphone.

It is common to confuse the terms digital wallet and digital accounts but it is important to highlight that they are different concepts. Contrary to a digital account, a wallet does not necessarily have to be associated with a financial institution.

According to a study performed by Visa Consulting & Analytics, in 12, XNUMX% of Latin Americans had already adopted digital wallets as their preferred method of payment.


How instant payments are revolutionizing electronic payments


As the name itself states, instant payments allow money to be transferred in real time between accounts. This type of transaction occurs in a matter of seconds, eliminating the need for middlemen and being performed through applications, sites, or digital wallets.

The rate of adhesion in Latin America to instant payments varies significantly among the six countries with the highest GDP in the region: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. Brazil, for example, stands out as a success case with the implementation of Pix, while Chile, despite having promised to create a similar type of system, has not shown significant technological progress in recent years.

Furthermore, the Brazilian case shows the potential for instant payments to revolutionize electronic transactions: with the growing use of Pix, banks that are associated with the Brazilian Federation of Banks (Febraban) recently announced that as of 2024, they will no longer offer Special Credit Transfers (TEC) and Credit Documents (DOC).

TEC and DOC are money-transfer services that were among the most-used payment systems in the country. According to Febraban however, with the advent of Pix and the high volume of bank transactions at lower rates, both TEC and DOC ceased to be the preferred method of payment, as clients have moved to the instant payment system which is free and instantaneous.



Trends in electronic payments


While electronic payments are constantly evolving, there are many opportunities for companies and financial institutions that provide products and services in the payments market.

According to the New Payments Index 2022, 74% of Latin Americans pay their accounts online, and 19% plan to do so in the future. That is, there is still a vast universe to be explored. Against this backdrop, we identify the following trends in means of electronic payments:


Crypto Payments


Far beyond just an investment option, cryptocurrencies are gaining ground as a means of payment.

Research by CoinsPad in Brazil, Colombia, and Argentina, shows that 41% of people have a more positive perception of establishments that accept payments in digital currencies.


Read also | Crypto as a Service: Engine to unlock financial solutions for cryptocurrencies?


Tap on Phone


Tap on Phone is a type of contactless payment that allows a smartphone to function as a type of card machine. This method allows payments by credit or debit card to be accepted directly on a cell phone.

The number of contactless payment cards is expected to grow by 290% in Latin America by 2024, while volumes of contactless payment will have a compounded annual growth rate of 92%. This data is from a study by Juniper Research.


Buy Now Pay Later


"Buy Now, Pay Later” ( BNPL " ( Buy Now Pay Later) is a type of electronic payment that allows clients to purchase something now, and pay for it in the future. It is heavily used in online purchases that can be paid for in a single payment or in installments, without interest on short-term financing.

Its popularity is due to its ease of use and convenience, mainly because there are no long credit verification processes, and the method is completely integrated with the purchasing journey and the checkout experience.

Would you like to find out more about this means of payment? Check out the video!


Cross Border Payments


A Cross Border Payment is a financial transaction that occurs between two parties located in different countries.

The objective of Cross Border solutions is to facilitate international transactions, making them more agile, mainly in terms of converting values, fees, and taxes levied on the transaction.


Click to Pay


Click to Pay is a digital payment system that functions in a manner similar to a digital wallet, in which it is possible to store information and use that information in subsequent payments.

In countries where this type of payment is already available, it may be activated whenever the user is at checkout in an online store, and chooses to pay with a card. All the user has to do is select the “click to pay” option to make payment, without having to input all of their bank information again.


How to offer solutions with electronic means of payment using Dock’s technology


A Dock One is Dock’s unique Banking and Payments platform, created so your business can easily scale its payment and credit transactions anywhere in the world.

Integrated and in constant evolution, the solution offers the most modern and secure technology for financial services, with a very quick time to market. Fully API-based, the platform offers four main types of solutions:

  • Banking: offers your clients a complete digital account with access to the most-used financial services.
  • Cards & Credit: the main credit card issuers, to help gain the loyalty of your consumers.
  • Acquiring: simplifies business management with processing, software updates, and real-time monitoring.
  • Fraud Prevention: state-of-the-art fraud-management technology to identify and prevent fraud during all stages of a transaction.

You can count on Dock to create, integrate, and evolve, while providing exceptional experiences for your clients. All of this in just one location. Learn more:


Electronic payments: what you saw in this article


  • Electronic payments transfer financial values by means of online transactions on the Internet. They are understood to be any type of payment that is not made in cash.
  • Digital payments are a type of electronic payment in which the transaction occurs online. However, they do not use any type of physical element.
  • Digital payments are a type of electronic payment in which the transaction occurs online. However, they do not use any type of physical element.
  • Payment cards, payment links, and digital wallets are among the main types of electronic payments. Instant payments are also on the list, notably Pix, the system used in Brazil.
  • Crypto Payments, BNPL, Tap on Phone, and Cross Border Payments are some of the trends in digital payments.


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