The Bank for International Settlements (BIS) recently released a paper focused on fast payments and financial inclusion in Latin America and the Caribbean, providing insights on how advancements in payment systems are reshaping financial access across the region.
With over 100 jurisdictions worldwide adopting fast payment systems (FPS), Latin America and the Caribbean (LAC) stand out as a dynamic hub where 15 countries have implemented these technologies.
The report from BIS explores the interplay between FPS, financial inclusion, and emerging innovations like central bank digital currencies (CBDCs), offering critical insights into their impact and potential.
A key takeaway is the transformative role of FPS in bridging financial gaps.
These systems, which enable near-instantaneous transactions 24/7, have gained traction in LAC due to their ability to serve both banked and unbanked populations.
Countries like Brazil, with its Pix system, and Mexico, with CoDi, illustrate how FPS can lower transaction costs and improve access to digital financial services.
The report highlights that FPS adoption has surged alongside mobile phone penetration, which exceeds 70% in the region, making mobile-based payments a vital tool for inclusion.
By reducing reliance on cash and traditional banking infrastructure, FPS empowers small businesses and individuals in remote areas to participate in the digital economy.
Another insight is the synergy between FPS and financial health.
The BIS notes that fast payments enhance efficiency and affordability, key drivers of financial inclusion.
For instance, Pix in Brazil processed over 3 billion transactions monthly by mid-2023, demonstrating its scalability and appeal.
The report cites evidence that FPS reduces the cost of remittances—a lifeline for many LAC households—while enabling microtransactions that support day-to-day economic activity.
This affordability, coupled with real-time processing, fosters trust in digital systems, encouraging broader uptake among underserved communities.
The BIS also examines the role of CBDCs as a complementary innovation.
While FPS dominates current efforts, countries like The Bahamas (with its Sand Dollar) and Jamaica (with JAM-DEX) are supporting retail CBDCs to further inclusion goals.
The research report suggests that CBDCs could address gaps left by FPS, such as offline payment capabilities or cross-border interoperability, though their adoption remains nascent in LAC.
Unlike FPS, which leverages existing banking networks, CBDCs offer central banks a direct tool to reach unbanked populations, potentially amplifying financial access.
Challenges, however, persist.
The report identifies uneven infrastructure—such as limited internet access in rural areas—as a barrier to scaling FPS and CBDCs.
According to the report from BIS, regulatory harmonization across borders also remains elusive, complicating regional payment integration.
Moreover, while FPS has boosted inclusion, its success depends on sustained public-private collaboration to ensure security and consumer protection.
The comprehensive BIS paper positions LAC as a proving ground for fast payments and financial inclusion.
The region’s experience underscores FPS as a catalyst for economic participation, with CBDCs poised to play a supporting role.
Some of the main takeaways include the transformative power of mobile technology to drive adoption, the tangible economic benefits of cost-effective transactions, and the need for robust infrastructure to sustain progress.
However, the long-term benefits or real value proposition of CBDCs and newer forms of payment methods is not yet fully known. This is primarily due to these technologies being in their early stages of development and adoption. Evolving consumer behavior and preferences will ultimately dictate whether or not a particular set of payments technologies will be widely adopted in the foreseeable future.