By: Eric Rosenthal, VP for America at Rapyd, Fintech-as-a-Service Global Unicorn.
One of the effects of the new normal has been that e-commerce continues to gain ground. Mexico is one of the Latin American countries that offers the greatest opportunities for international retailers and online markets. It is important to mention that in 2020 alone, online purchases in the country increased by 30%, which resulted in digital payment methods gradually flourishing. In the years to come, revenue will be generated E-commerce of Mexico are growing at an annual rate of 6.5%, resulting in sales of $ 21.8 billion by 2024.
In a country where cash is 62% preferred as a method of payment, the ability to bridge the physical world and digital transactions could be one of the most important challenges in this area. digital transformation.
Bearing in mind that only 37% of Mexicans have a bank account, what we from the company found was that there are several ways in the country to complete digital transactions for those who typically handle cash. The most common ones include: printed vouchers, payments via cell phones, prepaid or gift cards, and electronic wallets that collect points (e.g. plastic from supermarkets). In this way, Mexican consumers can use this to digitize their money in convenience stores.
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Moving on at a time when many people are restricting their mobility if possible, we emphasize that only 34% of Mexicans have a credit card and offer more locations that accept alternative payments for cash that both consumers and consumers also benefit dealers. Even without the pandemic, it has been shown that vendors need to offer a variety of payment options, and Mexico’s shift to online shopping is very likely to continue here, although cash will continue to be vital to both online payments over the next few years, as well as which are made physically.
It is interesting to stop at one of the points pointed out at the beginning: 62% of Mexicans prefer cash. And this happens in the context of the growth of the E-commerce had an acceleration like never before in history.
Why is this preference given for the continued use of cash? It goes without saying that Latin America is one of the least banked regions, but it’s also true that virtual wallets and neobanks have thrived there. So why does this situation continue to occur? Undoubtedly, there is a need to invest in financial literacy as many people in Mexico and Latin America still believe that a bank account is required to use a digital payment method (MDP), and this misconception occurs with both consumers and merchants on .
Of course, there is also a feeling of insecurity (fear of falling victim to fraud, hacking or theft of the device on which the account is installed) and not being sure where their values are, knowing that virtual ones are safe Wallets not. Without a doubt, this is a shame as many users lose the opportunity to have more and better payment alternatives. Even better prices and a wider range of products and services offered on digital platforms.
While users are slow to access the new payment methods, fintechs have a huge market ahead of them in which to evolve and even offer services that would increase their billing exponentially.
Part of it was warned by the Latin American Banking Federation (Felaban) in its 2019 Financial Inclusion Report: “The lack of financial literacy in Latin America is an obstacle to expanding access to financial products and services.” In this scenario, fintechs with their flexibility and agility become much more competitive and accessible to consumers.
- Read: The Urgent Need for Digital Transformation in Latin America
Fintechs are narrower platforms that offer transparency and that, when the customer uses them, perceive their intuitive design. In addition, they are very strong given the developments to come: they can offer both B2C and B2B services.
This moment is not just about a technological revolution. We are experiencing a cultural shift where those who adapt best can quickly reap the benefits. In this transformation, digital services are at the heart of change, hence their exponential demand and also that they are so important to everyone, consumers and organizations. And of course it is no less important that they have a lower cost to the users and open the financial game to those who have been ignored by the traditional system so far.