The Coronavirus pandemic the one that emerged in 2020 threw us into prolonged custody. This undoubtedly led to a shift in consumer buying habits, with a preference for contactless payments and online shopping. The truth is, there weren’t many options. With stores closed, many companies turned to e-commerce to survive.
The world is starting to open up again, but this preference from electronic payment seems to have come to stay. According to the message Mastercard New Payments IndexIn 18 countries, especially in Latin America, 83% of respondents are considering using at least one new payment method – such as cryptocurrencies, biometric technologies, contactless payments or the QR code. Almost three quarters (72%) of respondents say they have tried a new payment method that they would not have tried under normal circumstances, compared to 63% globally.
We talk to Walter Pimenta, Senior VP for Products and Innovation at Mastercard LAC Learn how this change will affect Latino businesses in the short and medium term.
Editor’s note: Answers have been edited for the sake of clarity.
ENTREPRENEUR IN SPANISH (ENT): What is the true state of electronic payments in the Latin American market?
WALTER PEPPER (WP): After the year the pandemic was declared, electronic payments continue to show their persistence and dynamism. Health restrictions accelerated the excitement for pop-up payments because of the security they convey, and under “pop-up payments” we include contactless technology, but also QR codes, biometrics and cryptocurrencies. According to the new report MasterCard New Payments Index84% of Latin Americans report using at least one type of threshold money in the past year. COVID-19 caused consumers in the region to try new flexible payment options to get what they want, when they want, how they want (86%) and be ready to keep looking for new payment methods in the future (79%) .
These changed consumer habits have their counterparts in stores that respond with different purchase and payment methods. In the above study, more than half of consumers in Latin America (59%) say they would avoid companies that do not accept electronic payments and 70% say they are open to companies that offer the most innovative methods. All signs point to a continued growth path for contactless devices: Globally, almost 7 in 10 consumers (67%) expect to use a contactless card this year.
- More information: 4 easy steps to get payments online
ENT: How difficult was it to “evangelize” a market that is often suspicious of financial technology?
WP: Latin Americans have long had a relationship with cash. Some prefer it for their daily groceries but also for major operations like buying a house or a car. Although electronic payments were a rising trend prior to the declaration of the pandemic, COVID-19 catapulted the switchover. In 2020, as the world stalled, consumers shifted their shopping habits to contactless payment and online shopping, and retailers shifted their business to the digital ecosystem. More than a year later, research by Mastercard shows that the adoption of new technologies continues to grow and the appetite of consumers for new digital experiences that are fast and flexible. It’s interesting to highlight one fact from the study: when testing new payment methods, 86% of consumers want to make sure they are safe.
While cultural change is slower, the survey shows that it is enough to ensure that the payment option is secure to move the operation forward.
ENT: How did the pandemic drive the spread of contactless payments in LatAm in particular?
WP: The pandemic accelerated a trend that we had already seen around the world, as well as in Latin America and the Caribbean. Consumers are looking for flexibility and new forms of payment, and nearly 8 in 10 respondents (77%) in LAC for the study New payment index agree that they prefer to shop in stores that are present both in person and online, and 79% express their loyalty to merchants who offer multiple payment options. A recent study of 5,500 MasterCard merchants found that between the first quarter of 2020 and the first quarter of 2021, more than a fifth of these merchants worldwide increased the number of connections to consumers by either activating or accepting e-commerce channels contactless transactions. Over the same period, Mastercard saw the total number of online transactions increase by over 30 percent.
Consumers are looking for flexibility and new payment methods / Image: Depositphotos.com
ENT: How do you see the Bitcoin fever among millennials? Any recommendation to enter this market?
WP: Cryptocurrencies are gaining traction among millennials: Today, consumers can buy, sell and trade cryptocurrencies as a commodity or investment. Consumers are also showing an increasing interest in being able to spend these assets on everyday purchases. As interest in cryptocurrencies as a payment method grows, nearly 4 in 10 people (37%) in Latin America and the Caribbean say they want to use them next year. It is noteworthy that the predisposition to using cryptocurrencies is more pronounced in the younger segment: 61% (67% millennials) are more willing to use them today than they were a year ago; 74% (79% Millennials) are interested in learning more about cryptocurrencies, and 72% (76% Millennials) say they would use them more often if they understood them better.
ENT: How do you see the penetration of biometric payments in such a special market as Latin America?
WP: Biometric payments are a huge advancement in payment security, which is one of the primary concerns of the traditionally more conservative Latin American consumer. Biometric identification methods create more trust: 66% of those surveyed stated in the study that they feel more secure with biometric technologies than with the introduction of a PIN to verify a purchase.
- To learn more: 4 digital payment trends for 2021