Means of Payment in Latin America: evolution and opportunities

Publicado em 20 de maio de 2022.

Tempo de leitura 16 minutos de leitura

We all need to keep pace with the evolution of means of payment. But why is that? Well, when the way we make transactions changes, society itself also changes. In this article we’re going to show how this happens in practice, based on the current scenario in the six biggest economies in Latin America: Argentina, Brazil, Chile, Colombia, Mexico, and Peru.

Although the unbanked population in the region is still large and there is still a strong dependency on cash as a means of payment, this is changing, and changing fast, which means we need to be prepared for what’s to come.

To support all those businesses keen to keep pace with the developments and opportunities in this market and offer their customers the best experience, Dock, through its Research area, developed a wide-ranging study of the topic, drawing on a variety of secondary data sources.

This research gave rise to our study Lands of Opportunities – A map for means of payment and digital banking in Latin America. Below are a few of the key insights from the study. Check it out!


What are means of payment?

As we know, means of payments are all those different ways people pay for products or services. They include credit and debit cards, cash, instant payments, and others. To discuss this concept, we must first take a quick look into the past to understand how we got where we are today.

Everything began thousands of years ago with the barter system. As society, trade, and technology evolved, the concept became much broader, evolving from exchanges of agricultural produce to metal coins and, much later, paper money, which was created in the seventeenth century.

Today, when we talk about the concept and the different resources that can be used to pay for things, a completely different picture comes to mind. It’s far more common for us to think of the new means of payment and all the possibilities the market offers – which are growing all the time.


What means of payment are there?

Although cash is still the most widespread form of payment in Latin America – used in 70% of all transactions – there are now many other ways to pay for things.

Digital payment methods have taken great strides in recent years, and were also given a strong impetus during the Covid-19 pandemic and with the adoption and expansion of online habits. This means that the percentage of cash transactions is likely to decline in the region and that Latin Americans will increasingly turn to new methods to pay for their purchases.

Below we explain the different means of payment available, dividing them into the ones that are consolidated and the ones that are on the up.


Traditional means of payment most used in Latin America


Paper money is still the payment of choice for the majority of Latin Americans.

So much so that even 14% of online purchases are still paid for using cash. The cash payment is either made upon delivery of the product, or it is enabled by vouchers, which are generated by e-commerce merchants and paid in convenience stores or banks.



While checks may look like a thing of the past, the fact is that until just a few years ago, they were a leading form of payment in several Latam countries. Nowadays, checks are in decline, losing much ground to credit and debit cards, and they are no longer universally accepted in commercial establishments.


Credit and debit cards

After cash, cards are the other top means of payment in Latin America. Since they first emerged, they have gained great popularity and the region has witnessed a rise in the number of establishments and consumers adopting cards, both debit and credit.

In recent years, the technology behind these cards has evolved. Today, along with the development of chip cards (containing an embedded microchip) and facilitated access to card payment technologies, it is now possible to make card payments using cell phones and other mobile devices, and cards themselves can be used in contactless payments.


Barcoded bills

This kind of payment is relatively common in Latin America, because the payer does not need a bank account – an important feature, given the region’s large unbanked population. The business establishment issues the barcoded bill and the consumer can pay it at a lottery store, a bank, or the establishment itself.


The future of means of payment in Latin America: trends and opportunities

So far, we’ve looked at more traditional forms of payment that are well established in the Latin American market. But we also want to look at the ones that are just beginning to gain currency and could turn out to be game changers in the near future, offering great market opportunities.


Instant payments in Latin America

With the recent experience in Brazil, where the instant payment system Pix has been successfully rolled out, achieving good uptake and transaction volumes, as well as similar success cases in other countries, it’s fair to say that instant payments are a promising trend in the region.

However, different countries are at different stages of development when it comes to instant payments. A few examples:

  • Brazil: success with the central bank’s Pix instant payment system, facilitating financial transactions with operations taking no more than 10 seconds to clear. It’s operated using a token – the user’s cell phone number, email address, etc. – and works 24/7.
  • Chile: a system similar to Pix is in the pipeline, but what is currently available is a 24/7 wire transfer system with almost immediate clearance, without the use of any token or QR code.
  • Argentina: Tranferencias 3.0, rolled out in November 2021, has had good uptake since.
  • Mexico: launched CoDi in 2019, a digital payment platform that offers QR code payment, NFC technology, links, and text messages, in a bid to curb the population’s cash habit.
  • Peru and Colombia: private-sector initiatives only, not systems produced by the central bank. Even so, recent trends and predictions point to increased uptake and system evolution.


Contactless payment

In many countries, contactless or NFC (near field communication) payment took off with the onset of the pandemic. This was largely because it enhances the cardholder’s safety, as no direct contact is required to make a purchase, enabling social distancing.

In Brazil, in the first quarter of 2020, contactless payment transactions saw 456% growth, according to the Brazilian Association of Credit Card Companies and Services (ABECS). As for 2022, a study by Dock indicates that around half of in-person transactions will be made using contactless cards by the end of the year.


Payment link

Another digital means of payment in Latin America gaining in popularity in recent years is the payment link. The procedure is simple and practical: a hyperlink is sent to the buyer by message or social media, and they simply click on it and make the payment.

It’s a new way to capture sales, because the retailer doesn’t need a website, a physical store, or a card machine to sell their products or services. Its ease of use is also what makes the payment link so popular among small businesses and self-employed workers. It’s also offered as a solution in corporate digital accounts.


QR code payment

Another option for paying without any physical contact is the QR code, whose use was boosted during the pandemic in YouTube live streams and the activities of social media influencers. In some countries, QR codes are used to advertise brands and encourage people to buy products via apps, as all the user has to do is scan the code that appears on the screen by positioning their device so that it appears in their digital viewfinder.

However, QR codes can also be used at points of sale, simplifying the retailer’s relationship with different players in the payment chain.

In Brazil, the QR code is one of the ways Pix instant payments can be made at commercial establishments.


Private label cards

In the six countries analyzed in the study – Argentina, Brazil, Chile, Colombia, Mexico, and Peru – big retailers already offer financial products under their own tradename, especially private-label cards.

There are opportunities not only to enhance the existing offerings, but also to expand the customer relationship through as-a-service solutions (e.g., banking as a service, acquiring as a service, etc.). Today, most retailers do no more than offer their customers cards to earn discounts and points in loyalty programs, with only a few going so far as to offer other credit products.


Biometric payment

Another technology that was boosted by the pandemic is biometrics – although its use is still relatively limited. Biometrics can use fingerprint recognition, voice recognition, facial recognition, or iris scanning. Each technology tends to be used in a different context, mainly as a way of authenticating operations.

Solutions involving biometrics are already being explored in different countries and are expected to grow. According to the data gathered by Dock, 43% of Colombians expect to use biometric payment in the near future.


The size of the unbanked population is the biggest challenge facing the digital payments market in Latin America

In Latin America, alongside the widespread preference for cash, the Dock study reveals that 54% of the population do not yet use any banking services or digital methods for their financial transactions.

Another finding was that in Latin America today, there’s a lag between the technology and its use – i.e., digitalization is way ahead of bank service utilization. Although a wide range of modern payment methods are on offer, they are still severely underutilized.

In fact, this is the biggest hurdle facing the payments market in the region. While digitalization is growing apace, the financial inclusion of the population is lagging way behind.

  • 71% penetration of smartphones in 2020
  • Just 20% use the internet for financial services
  • Just 12% use the internet to sell products or services

One factor influencing this scenario could have to do with the fact that the region’s high digital adoption is related to its age demographics. In Latin America, 58% of the population are between 18 and 44 years old. This is far different from the profile of the populations of Europe or the United States, for example.


Payment companies: the fintech boom in Latin America

One reason why payment technologies have developed so fast in the region is the high number of promising fintech companies in these countries. Indeed, in the last few years there has been a real investment boom in fintech startups in the region.

So much so that Latin America has even been dubbed a “unicorn breeding ground,” having reached the end of 2021 with 41 unicorns, 14 of which are from the banking and payments market – the sector with the highest proportion.


Segments where unicorns are operating in Latin America

  • Fintech: 14
  • E-commerce/Marketplace: 5
  • Logtech: 3
  • ID Tech/Authentication: 3
  • Food Tech: 3
  • Other: 13

Alongside the region’s fintech expansion, another phenomenon driving the surge in companies specialized in payments is embedded finance. This is when a company whose core business isn’t financial offers its customers financial solutions and thereby acquires a new source of revenues and greater customer engagement.

Examples of embedded finance include retailers that offer their own private-label cards, industrial players that offer their partners and suppliers digital accounts, and so forth. It doesn’t matter what segment a business is from, it can still operate in the payments market.


Latin America’s payments market: why it’s a land of opportunity

Dock chose the name of its study for a good reason. Latin America really does offer lands of opportunity.

Granted, there is still a long way to go: post-pandemic recovery of economic growth and the population’s moderate optimism about these better times; significant barriers facing new business ventures; a long way to go to achieve full financial inclusion – and others.

So why is it that we see these six Latin American countries as Lands of Opportunities?


The answer can be encapsulated in nine elements, which are already propelling the banking and payments sector:

  1. Financial education and offline strategies to boost financial citizenship and expand the customer base
  2. Growth of Buy Now, Pay Later and its contribution to financial inclusion
  3. Provision of financial services by retailers and companies from other segments through the phenomenon of embedded finance
  4. Expansion of e-commerce and increased card payments
  5. Digital payment options for use in e-commerce
  6. Instant payments, at different phases of implementation in the different countries analyzed
  7. Good overall conditions for doing business in Mexico, Chile, and Colombia
  8. Arrival of foreign fintech companies, helping to develop the Latam market
  9. Turning point in the Peruvian market, with incentives for digital banks

Also, we cannot forget the recent history of this market, which, despite the differences among the countries, is taking part in an overall global innovation agenda, a key aspect of which is the development and easing of regulations, and advances in areas like open banking, central bank digital currencies, and instant payments.

Below, we comment on each of these drivers of the Latin American market. Want to discover the others? Access Lands of Opportunities in full.


Financial education and expansion of the financial system to overcome challenges

The Dock study identified demand for wide-ranging, accessible financial education delivered offline as well as online so that more vulnerable populations can also benefit.

Some initiatives to reach out to people with little or no access to financial services and the internet have proved very effective. Fintech and retail companies have adopted effective offline strategies in physical stores and in the press and mainstream media.

The fact is that while these players can benefit from the great opportunities Latin America offers, they themselves also have an important role to play in the region’s development. After all, as we have seen, digitalization is something that supports financial inclusion, but is not a determinant of it.

To get more Latin Americans involved in the financial ecosystem, it must become more competitive, offering more accessible customer-centered services, encouraging innovation, and expanding the payment and collection infrastructure.



Buy Now, Pay Later is a big trend in the Latin American payments market and shows every sign of becoming a major driver of its economy. It’s expected to grow fast in the next few months on the back of the e-commerce boom and the global expansion of the payment model.

BNPL is a credit solution that enables low- and mid-ticket products (like domestic appliances) to be paid for in installments. This means that in countries where unemployment rates are high, low-income individuals can still obtain durable goods and keep the economy rolling.

Although BNPL is a credit solution and so does entail credit checks, there are already some players – in Mexico, for example – where these checks are done without examining bank or financial service data. They use different information, like telecom data, so even people who don’t have a bank account or work in the informal economy can still gain the benefits of this means of payment.


E-commerce on the rise

Like everywhere around the world, Latin America also witnessed a surge in e-commerce during the pandemic. And even since the public health crisis ended, this new habit shows no sign of abating; in fact, it’s expected to continue to rise.

It’s estimated that by 2024 the market will have grown by 29% and be worth US$ 580 billion, driven mainly by Brazil and Mexico. That means that there is a great deal of room for financial service businesses to also grow by offering solutions and services tailored to this market.


A good time for new foreign entrants

In its study, Dock detailed not only the evolution of technology for financial services, the digitalization of means of payment, and the exponential growth in the number of fintech companies in recent years, but also identified a marked presence of foreign companies operating in the Latam market.

One indicator of the scope of opportunity for new entrants in the region is the estimate that by the end of 2022, one third of Peru’s fintech companies will be foreign. Another is the high absolute number of foreign fintech players operating in Mexico (91) and the fact that 8% of Colombia’s fintech companies are international players.


Want to check out the Dock study Lands of Opportunities – A map for means of payment and digital banking in Latin America? Access it here!


Means of payment in Latin America: there’s a great revolution going on in the region

And it’s not just in how we do banking!

We believe that with the evolution in means of payment and increased financial inclusion, Latin America will see a tangible difference in its social and economic development.

Actually, it’s already happening. For example, with the rise in the number of bank account holders, thousands more Latin Americans were able to receive government payouts at the beginning of the pandemic.

Also, financial services are now managing to reach places and people that didn’t traditionally have access to them. Citizens with no means of proving their income have begun getting access to credit; people with no proof of residence can open a digital bank account to do financial transactions; micro and small businesses can take advantage of new payment solutions, helping boost their sales.

We invite you to join us in this transformation!

Means of payment in Latin America: what we covered in this article

  • Means of payment are the different ways a product or service can be paid for. They include credit and debit cards, cash, instant payments, and others.
  • Latin America is a region with great opportunities for the banking and payments market because of factors such as the high demand for financial inclusion, the growing digitalization of the population, and the fintech-friendly business environment.
  • The growth of fintech companies in Latin America has been a driver for means of payment, as has the advent of embedded finance, which allows businesses from different market segments to “be a bank” and offer their customers financial solutions.
  • Some of the latest advances in the Latam banking and payments market are: financial education; new credit solutions like Buy Now, Pay Later; the arrival of new international entrants; the rise of e-commerce and new regulations.

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