This week, Mastercard released findings of its study of Latin American consumer payment preferences. The announcement was part of the Mastercard LAC Innovation Forum.
Over the past few years, the use of various alternative payment methods has increased; 77% of consumers have used electronic payments, with credit and debit being the most utilized payment instrument both online and in-store. Debit was used by 63%.
“Digitalization in Latin America is a phenomenon that is here to stay, as it is presented as a solution to the needs that Latin Americans face every day,” Mastercard EVP Walter Pimenta said. “Mastercard has been known for being at the forefront of the most current technology trends, and that includes innovating at the pace of consumers. New payment methods have become tools that facilitate payments and transfers, which is why Mastercard has partnered with several digital wallets in various markets in Latin America and the Caribbean with the aim of providing the best payment experience to all consumers.”
People in Latin America and the Caribbean continue to demonstrate their openness to testing new payment methods and their adoption of electronic payment methods. Cards continue to be the preferred medium, and the use of alternative digital methods has increased exponentially while the use of cash has decreased.
The use of cash has been declining, with one-third third of consumers indicating that their preference for cash has been displaced by the digitization of payments. More than half of consumers surveyed (63%) indicated that they were very comfortable using new technologies. In this context, it is worth highlighting:
Debit cards are the most used payment method, with a usage rate of 55% and 41% for in-store and online purchases. Chile has the highest penetration of debit cards, both in-store (82%) and online (72%).
Half of consumers indicate that the adoption of electronic payments is motivated by reducing the use of cash. The second reason, with 45%, is due to transaction speed. More than in any other market in the region, 60% of Argentinian users carry less money with them.
While the introduction of new payment methods has increased, consumers prefer digital wallets when making a purchase in a store due to convenience (45%), speed (44%), and accessibility/user experience (44%). Two-thirds of consumers use digital wallets for online or in-store transactions. The countries that make the highest use of this type of payment are Argentina and Uruguay, where more than 80% of consumers have used it.
Digital wallets mainly appeal to young adults, even more so when it comes to making online payments. More than 40% of consumers between 18 and 30 cited convenience as the top factor driving their online payment preferences.
When making a purchase, 44% of consumers use a mobile device to perform a transaction. The country where these devices are most used for payments is Brazil (86%), while in Jamaica it is the opposite, where this type of payment has not been implemented for the most part (13%).
Consumers are looking for frictionless experiences that allow them to make and receive payments easily, quickly, and securely. Security, and specifically the fear of fraud, is the main factor determining consumer payment behavior. In fact, 83% of Latin Americans indicated that security features are the most influential aspect when choosing which payment method to use, followed by the protection of consumer financial information at 79%.
According to respondents, debit cards are the payment method they fully trust (36%), followed by bank transfers (34%) and credit cards (27%). Uruguayans feel the safest when making transactions with their debit cards, while Colombians find them less secure (11%).
“We know that cyberattacks are a growing concern in the Latin American region for all consumers,” Pimenta noted. “People deserve the ability to make payments conveniently, quickly and easily without compromising their security. That’s why Mastercard is continuously taking the necessary actions to strengthen the protection of our consumers through a holistic cybersecurity strategy. To ensure a secure digital ecosystem, we use data analytics and AI to identify vulnerabilities in advance and activate automatic protection shields for all our consumers.”
Consumers in Latin America and the Caribbean are highly concerned about their data privacy in the world of digital transactions, where 73% of respondents said privacy is a top priority, and that they always choose payment methods that protect user data. Virtually all, 96%, say they take steps to protect their data. Top privacy-protecting measures are using secure and reliable payment platforms (45%), avoiding sharing sensitive financial information online (45%), and using strong, unique passwords for financial accounts (44%).