Real-Time Payments Are Transforming Latin America
RTPs are bringing inclusion, reducing costs and replacing credit cards
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Latin America is undergoing a real-time payment (RTP) revolution just like Asia’s, with digital payments exploding and fintech growth of 340% over 6 years.
Regular readers will know that I write about Brazil’s PIX fairly regularly. Still, the region is home to many fintechs and new payment systems that haven’t garnered the press they so rightly deserve.
Unsurprisingly, many of them are focusing on the “Holy Grail” of cross-border payments, going after high margins by banks and cards.
What makes the revolution a bit different from Asia’s superapp explosion is that most payment systems are domestic and lack the press-grabbing headlines that followed the explosive growth of Brazil’s PIX. They are also roughly five years behind those in Southeast Asia.
That isn’t to say that there are no superapps, with the closest being Mercado Libre from Argentina, which now operates e-commerce in some 18 nations with its payment system Mercado Pago operating in six.
Two of the most successful RTPs are PIX in Brazil and Mercado Libre in Argentina. These giants were largely created due to their central banks’ efforts to create an RTP system. This central bank support mirrors success stories in India and China, where UPI, Alipay, and WeChat Pay benefited from the central bank supporting RTP systems.
What is most important is that, “once again,” RTP systems are increasing financial inclusion, reducing financial costs, and cutting into credit card revenue, sometimes forcing them to lower their rates.
I say “once again” because this pattern is repeated in every region where we see the growth of RTP systems.
Asia, Latin America, the Middle East, and Africa all show how successful RTP can be.
Card companies should be scared!
👉Latin America Payment Takeaways
🔹 Latin America is experiencing a transformative shift toward real-time and cross-border payments, significantly enhancing the speed and efficiency of financial transactions across the region
🔹 The thriving Fintech sector, particularly in Mexico, Brazil, and Argentina, plays a key role in driving financial inclusion by offering innovative solutions to underserved communities and reshaping the payments landscape
🔹 With a strong commitment to digital transformation and regional integration, Latin America is poised to become a leader in the global payments industry, unlocking its full potential for a more connected and efficient financial ecosystem
🔹 The success of Mercado Libre in Argentina is intrinsically linked to the innovation in immediate payments led by the country’s Central Bank and reflects the influence of the payment model used in China.
🔹 The implementation of RTP systems is leading to a decrease in financial costs, as credit card fees are usually high compared to the lower fees of RTP. This scenario is forcing card-issuing entities to lower their rates, leading to greater efficiency in the payment system.
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