Digital payment methods: the key to boost Latin American e-commerce activities

With 73.5% of the adult population in Latin America owning an account in a financial institution (including traditional banks, fintech companies, mobile money providers, credit unions, and other regulated institutions), e-commerce has registered a rise in the last few years.

2020 was a breakpoint, with the coronavirus setting an inflection point in the consumption habits of the region. The lockdowns registered this year were the reason for many people to adopt e-commerce habits for getting the supplies they needed. For 2021, more than two-thirds of the population in the region had already made online shopping, according to Statista. This trend would transcend the pandemic years to become increasingly common.

Statista affirms that Mexico and Brazil are leading the race for e-commerce habits in Latin America, with each country holding nearly 30% of the buyers using this model. Mexico is also on the list of countries that lead e-commerce sales in 2023: with a growth of 14.2%, it’s 7^th, following the Philippines, India, Australia, Indonesia, Malaysia, and Thailand.

According to the payment platform Ebanx in their report “Digital payments connecting businesses and people in rising economies”, in 2022, the use of Alternative Payment Methods (which are defined as anything other than credit and debit cards), reached 39% of the digital commerce activities in Latin America, with an eight-percentage-point increase compared to two years before.

The company affirms that numbers demonstrate that Latin American people are choosing new ways to make payments, without regard if they have bank accounts or not, due to the offer of new methods. According to the World Bank data, the same report says just 28% of the Latin American population have a credit card.

Latin American e-commerce prepares for a further fight for hegemony

Although e-commerce activity shows a rise, reaching US $168,000 million in online retail sales, just a few enterprises still hold this market. Mercado Libre is the regional leader in this topic, with more than 100 million registered users, more than 668 million monthly visitors, and primary markets in Brazil, Mexico, Argentina, and Colombia.

Brazil figures as the country with more options for e-commerce transactions, with enterprises such as Americanas, VIA Varejo, a Casas Bahia group marketplace property, Magalu, Carrefour, Buscape and Mobly as leading competitors.

In Mexico, Amazon, Walmart, and Coppel stand out as the main alternatives for buyers who decide to do online shopping.

Chile, a potential emerging important market

The Chilean group Falabella has upped its digital activities recently, acquiring online shopping portal Linio in 2018 and integrating all its online business units into a single platform in 2021. Still, local competitors have yet to be able to near the revenues generated by Mercado Libre in Latin America.

In a regional market of 300 million people where e-commerce activities are expected to increase 20% by 2027, supply chain dynamics and logistics infrastructure, including industrial buildings for developing distribution activities, will be critical factors to boost the future growth of a shopping trend that has come to stay.