Given that over 90% of Mexican consumers use some form of online banking, it only makes sense that this digital shift would expand to other forms of electronic payments and connected commerce. This, as growing use of eCommerce sites, streaming media and the payment methods needed to power them all see increased use from a range of consumers.
“Right now, we have seen a lot of expansion or an explosion of FinTechs in Mexico,” Andres Obando, vice president of product at Kushki, told PYMNTS.
As a growing number of people started looking to sign up for Netflix, Spotify, Amazon and Uber, while also feeling wary of using handling cash during the pandemic, they moved to digital wallets and cards for online transactions.
Latin America Adopts Alternatives to Cash
The same is happening throughout Latin America, Obando said. Big players are coming to these countries, and the culture is changing. Kushki has seen this over the last two years in the transactions it handles, with the amount of cash declining while the use of transfers and cards has grown.
“We see that this phenomenon is changing from a cash perspective to safer ways to move money that can be cards or transfers, not only because of COVID, but because of how money is moved from side to side without any risk of getting stolen,” Obando said.
Pandemic Drives Change
Obando said he expects this to continue as a growing number of merchants get their eCommerce sites up and running and as previously unbanked consumers get cards so they can make purchases online themselves rather than doing it through a corner store as they have done in the past.
“That has exploded because of COVID because people are afraid,” Obando said. “A good thing in Mexico is that right now, you have a lot of access not only to banks but to these neobanks or wallets that can make you move from a cash user to a bank user.”
Obando said that many older people who did their first online transactions during the pandemic are continuing to do so. Now that these consumers have experienced eCommerce, they’ve seen that it’s safer, faster and more convenient.
Read more: Latin America’s Digital Payments Transformation Passes the ‘Grandma Test’
Merchants See Opportunities in the Region
Merchants followed this trend too by getting into eCommerce and transacting via wire transfers and cards. Obando said Kushki saw this throughout Latin America and, as a result, grew its onboarding team to a size five times what it was before.
“If the end user wanted, the merchant would also want to be on that side so that they can keep growing their sales,” Obando said.
Looking ahead, he said this will create continued demand for Kushki and all the connected world to move transactions and get new products and services to Latin America.
“Latin America has become very attractive for [venture capital] and for merchants around the world that want to start moving money and selling products or services in Latin America because it’s a high-growth market and a very fast-growing market at the same time,” Obando said.
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