Latin America is renowned for romance, and that embraces the world of finance, too. As some see it, 2022 is lining up as a year of greater digital payments passion for this fascinating region.
Though it’s like Europe in that dozens of sovereign nations border each other, the region has no EU-like entity smoothing cross-border trade issues and no single currency, leaving businesses to innovate digital pathways to commerce between unique markets and cultures.
In this environment, payments orchestration has a powerful impact, helping home-grown retail startups, FinTechs, small- to medium-sized businesses (SMBs), microbusinesses and consumers connect with digital ease and disrupt old-school, cash-dependent economies.
“There are markets or pockets of markets around the world where folks might be worried about pandemic recovery and how it impacts digital commerce, whereas in Latin America, the rocket ship has left the launch bay and it is moving,” Spreedly vice president of solution and success Daniel Scagnelli told PYMNTS.
He said 2022 is setting up as a year of meaningful change for digital payments in Latin America. Spreedly’s own business in the region grew 100% year over year from 2020 to 2021.
“The reality is that because of how nascent it is, and some of the monolithic banking culture there with total control historically, we’re starting to see the chips being taken away and chinks in that armor,” Scagnelli said.
Payments orchestration platforms like Spreedly facilitate this blossoming digital democratization of finance by optimizing around business drivers, ensuring payments success rates, strengthening partnerships and chipping away at regional issues, like providing digital front doors for large unbanked populations.
Painting these regional trends brightly, The Accelerating Time To New Markets Playbook, a PYMNTS and Spreedly collaboration, found healthy markets despite the global health crisis.
Per the latest Playbook, “Digital payments usage grew roughly 59% in Colombia between 2020 and 2021, for example, with 1.6 million of the nation’s consumers having downloaded and activated digital wallets for the first time during that period. This trend toward digital and mobile payments is reflected across the region, with consumers conducting 10% more eCommerce purchases via mobile app year over year in 2021.”
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World-Class Strategies for Regional Markets
Saying there is an “almost inverse relationship between the unbanked versus usage of digital mediums,” Scagnelli said LatAm is standing at the brink of a digital commerce revolution.
Noting that smartphone penetration is above 80% in much of the region, he said, “Especially with COVID as a driver, [we see] folks transitioning from unbanked to banked. Digital is an easy and quick entry point for payments in a frictionless way for consumers in those markets to start paying.”
Success here depends on an understanding of changeable terrains. As he said, “The players in each of those countries are different, from banks to [payment services providers] and payment methods. Folks have to be aware and think strategically about how they navigate through some of those challenges.”
Spreedly’s clients in the region run the gamut from online marketplaces to fraud-fighting solutions, the latter of which is crucial in an agglomeration of markets new to digital.
Using the example of LatAm eCommerce platform Luuna, Scagnelli said, “One of the struggles that they’ve had was the high rates of fraud, as well as false declines and poor success rates. By working with us, connecting different sides of the marketplace that we have access to, we’re able to help them not only expand, but also reduce false declines from 40% to 5%. That’s huge.”
See also: Spreedly Reports 100% Growth in Latin America
The Power of Endpoint Aggregation
Among rising use cases for 2022 is greater orchestration for simplifying and streamlining system throughput to give consumers the speed, security and digital experiences they demand.
“Some of these use cases are things like endpoint aggregation, and that’s not just across gateways and [providers]. It might be acquirers or other third-party endpoints like fraud services,” he said. “There’s expansion, and how do you enter new markets through payments orchestration? The ability to strategically test, or, for B2B organizations — merchant aggregators, specifically — how do they facilitate frictionless onboarding experience?”
Answers to these questions are being formulated in real time by the FinTechs sprouting up through the region or seeking partners to enter and tap into LatAm growth potential.
Along those lines, Scagnelli said, “I don’t suspect that there’ll be any slowing, at least in the next two to three years of that conversion from unbanked to banked, as well as continued growth in the use of credit cards as a payment medium, plus mobile and other channels.
“It’s more how do you pick the right strategy in that market to attach yourself to that growth and make sure you know how to navigate some of these challenges that are sure to come up?”
See also: Spreedly Teams With Visa For Network Tokenization In Latin America
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