South & Central America

After a 7% contraction in 2020, the sharpest in the world, the IMF predicts that South and Central American GDP will grow by 4.6% in 2021 and 3.1% in 2022. This is significantly below the average predicted growth rate for emerging markets of 5.8%.

However, these regional forecasts mask significant differences between countries and different demographics. Argentina is set for an economic growth of 5.8% this year; while in Brazil, the economy will grow by just 3.7%.

As ever, the region is highly sensitive to fluctuations in the commodities market. In the first quarter of 2021, exports from the region to China grew by 35%, year on year. By comparison, exports to Europe and the US grew by just 4%.

The disparity reflects Chinese demand for Latin American raw materials such as copper, zinc, and iron ore. To take one example, thanks to the return of Chinese manufacturing demand, by the end of 2021, there will be orders for 145,000 tons of copper in excess of what the market can supply. The result has been a 30% increase in the price of copper. South America produces 57% of the world’s annual copper exports. The stories for other commodities are similar.

This is fine, as long as commodity prices are rising. But if demand slackens and prices fall, overexposure to the commodities markets threatens the region’s economic prosperity. There doesn’t appear to be a near-term danger of this, not with the electrical-vehicle boom boosting demand for commodities. On the other hand, by mid-2021, growth in China’s industrial output had fallen to 6.4%, down from 8.3%. If this slump continues, it could hit demand for commodities.

South and Central America was also hit particularly hard by COVID-19. During the peak of the crisis, from 2020 through to summer 2021, the region had the second-highest cumulative death rate in the world, despite having
a much younger population than regions such as Europe and North America.

By mid-2021, however, there were signs of hope. Boosted by a relative absence of the vaccine hesitancy seen in other regions, Latin America’s vaccination effort was catching up to other regions. Two thirds of people in Chile
and Uruguay, for instance, were fully vaccinated by the end of summer.

With the exception of Argentina, where inflation is 42%, South and Central America haven’t seen the price increases evident elsewhere. However, inflation is still above target in many of the region’s major economies,
raising the prospect of central banks putting up interest rates in the near future.

South America
E-commerce % of total retail 4.9%
E-commerce completed on a mobile device 47%
World
E-commerce % of total retail 20%
E-commerce completed on a mobile device 53%

E-commerce in South & Central America

The e-commerce market

On the eve of the pandemic, the e-commerce market in South and Central America was worth US$92 billion
and was growing at a rate of 23% a year. E-commerce was still only 3% of total retail sales [13]. The average online shopper spent US$208 a year. South American e-commerce users complete 47% of their online purchases on
a mobile device, well below the world average of 53%.

According to figures available as this report was going to press, 13 million Latin Americans made their first
e-commerce purchase in 2020, during the height of the COVID-19 pandemic. E-commerce volumes across the region grew by 37%. This e-commerce boom was particularly pronounced in Argentina, which saw a 79% increase in online purchases.

This growth is already attracting increased investment from e-commerce leaders. Amazon, rather appropriately, expanded in Brazil — opening three new logistics centres to cope with the greater volume of deliveries. MercadoLibre, which saw its revenues grow by 90% in 2020, announced plans to triple its investment in Mexico
and to double its commitment to Brazil.

  • Card-based payments
  • Cash-based payments
  • Bank Transfer
  • Wallets
  • Other
[{"label":"Card-based payments","value":"60"},{"label":"Cash-based payments","value":"14"},{"label":"Bank Transfer","value":"14"},{"label":"Wallets","value":"11"},{"label":"Other","value":"1"}]

The payment landscape in South & Central America

The local payment culture

The most common way to pay for online purchases in South and Central America is by card, used in 60% of online purchases. Cash is used in 17% of transactions. Usually, this involves a customer choosing a cash-payment method at the online checkout.

The checkout generates a unique code for their transaction, which they take to a participating brick-and-mortar store. Once they pay, the store sends the payment to the e-commerce merchant, which then releases the goods for shipping.

14% use bank transfers and 11% e-wallets. Shoppers pay for the remaining 1% of online transactions with a range of other payment methods.

E-commerce market size ($USD billion)
South & Central America 92
World 4269
E-Commerce spending per capita ($USD)
South & Central America 208
World 1080

Enabling and limiting factors

On the eve of the pandemic, just over 56% of South and Central Americans had a bank account. But only 18%
had a credit card. These headline figures mask significant variations between countries. In Argentina, for instance,
just 80% of the population had a bank account. In neighbouring Chile, the figure was 74%.

One of the effects of COVID-19, however, has been to prompt a drive for financial inclusion. In Brazil the government worked with banks to help citizens open 25 million new accounts over the course of just two weeks in April 2020. This was necessary, because these people needed bank accounts in order to receive state assistance during lockdown. In total, according to one piece of recent research, more than 100 million Latin Americans have shifted during the pandemic from a reliance on cash to using new or previously dormant bank accounts.

Just under 70% of the region’s inhabitants had some kind of Internet access on the eve of the pandemic. And 71% had an Internet-enabled smartphone. According to the World Economic Forum, less than 50% of the region’s inhabitants have fixed-line broadband. But 87% live in areas with at least a 4G mobile service. Only 40% have
a viable choice of which type of connection they wish to use.

Conclusion

South and Central America is an increasingly attractive prospect for e-commerce merchants and their partners. The massive growth in financial inclusion, along with widespread connectivity and increasing acceptance of online retail, creates new opportunities with a broad range of demographics. For merchants who are able to localise and who work with partners that know the local market, the opportunities are huge.

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South & Central America

General Information

  • Population 652m
  • Population 15 + 498m
  • Online Population 456m
  • GDP ($US billion) 4,486bn USD
  • GDP per capita ($US) 6,878 USD
  • Card-based payments
  • Cash-based payments
  • Bank transfer
  • Wallets
  • Other
[{"label":"Card-based payments","value":"60"},{"label":"Cash-based payments","value":"14"},{"label":"Bank transfer","value":"14"},{"label":"Wallets","value":"11"},{"label":"Other","value":"1"}]
Banked population
  • South & Central America 56%
  • World 67%
Internet penetration
  • South & Central America 70%
  • World 62%
Credit card penetration
  • South & Central America 18%
  • World 19%
Smartphone penetration
  • South & Central America 71%
  • World 70%

South & Central America

The E-Commerce Market

E-commerce % of total retail
  • South & Central America 4.9%
  • World 20%
E-commerce completed on a mobile device
  • South & Central America 47%
  • World 53%
  • E-commerce market size ($US billion) 92bn USD
  • E-commerce spending per capita ($US) 208 USD

South & Central America

South & Central America payment methods

BitPay Type Wallet Regions Asia Pacific + 5 Boleto Bancário Type Cash Regions South & Central America Market relevance High Hyperwallet Type Bank transfer, Gift card, Prepaid voucher Regions Asia Pacific + 5 Market relevance High OXXO Type Cash Regions South & Central America Market relevance High OXXO Pay Type Cash Regions South & Central America Market relevance High Pago Fácil Type Cash Regions South & Central America Market relevance High PayPal Type Wallet Regions Asia Pacific + 5 Market relevance High PaysafeCard Type Prepaid voucher Regions Asia Pacific + 5 Market relevance High Paysera Wallet Type Wallet Regions Asia Pacific + 5 Market relevance High PayU Type Bank transfer Regions Asia Pacific + 4 Market relevance High PIX Type Bank transfer Regions South & Central America Market relevance High Rapipago Type Cash Regions South & Central America Market relevance High Skrill Type Wallet Regions Asia Pacific + 5 Market relevance High Allied Wallet Type Wallet Regions Asia Pacific + 5 Market relevance High Apple Pay Type Wallet Regions Asia Pacific + 5 Market relevance High Argencard Type Local payment card Regions South & Central America Market relevance High Banco Estado Type Bank transfer Regions South & Central America Market relevance High Boku Type Carrier billing Regions Asia Pacific + 5 Market relevance High Boleto Flash Type Bank transfer, Cash Regions South & Central America Market relevance High Cabal Type Local payment card Regions South & Central America Market relevance High Cencosud Type Local payment card Regions South & Central America Market relevance High Cobro Express Type Cash Regions South & Central America Market relevance High DaoPay Type Carrier billing Regions Asia Pacific + 5 Market relevance High Efectivo Multicaja (Klap) Type Cash Regions South & Central America Market relevance High Efecty Type Cash Regions South & Central America Market relevance High Google Pay Type Wallet Regions Asia Pacific + 5 Market relevance High Masterpass Type Wallet Regions Asia Pacific + 5 Market relevance High Mercado Pago Type Wallet Regions South & Central America Market relevance High Mobiamo Type Carrier billing Regions Asia Pacific + 5 Market relevance High Naranja Type Local payment card Regions South & Central America Market relevance High PagoEfectivo Type Bank transfer, Cash Regions South & Central America Market relevance High PSE (Boton PSE) Type Bank transfer Regions South & Central America Market relevance High Razer Gold Type Wallet Regions Asia Pacific + 5 Market relevance High Samsung Pay Type Wallet Regions Asia Pacific + 5 Market relevance High SPEI Type Bank transfer Regions South & Central America Market relevance High SWIFT Type Bank transfer Regions Asia Pacific + 5 Market relevance High TARJETA SHOPPING Type Wallet Regions South & Central America Market relevance High Tigo Money Type Wallet Regions South & Central America Market relevance High todito Cash Type Wallet Regions South & Central America Market relevance High VALEpei Type Wallet Regions South & Central America Market relevance High Via Baloto Type Cash Regions South & Central America Market relevance High WhatsApp Pay Type Wallet Regions Asia Pacific, South & Central America Market relevance High Almacenes Éxito Type Cash Regions South & Central America Market relevance Medium Aura Type Local payment card Regions South & Central America Market relevance Medium Banco Santander Type Bank transfer Regions South & Central America Market relevance Medium Bancolombia App Personas Type Bank transfer, Wallet Regions South & Central America Market relevance Medium Banrisul Digital Type Bank transfer Regions South & Central America Market relevance Medium AstroPay Type Prepaid voucher Regions Asia Pacific, Middle East & Africa, South & Central America + 1 Market relevance Medium BCI Lider Type Local payment card, Wallet Regions South & Central America Market relevance Medium Carulla Type Cash Regions South & Central America Market relevance Medium Davivienda Type Bank transfer, Cash Regions South & Central America Market relevance Medium Elo Type Local payment card Regions South & Central America Market relevance Medium HiperCard Type Local payment card Regions South & Central America Market relevance Medium KasNet Type Bank transfer, Cash Regions South & Central America Market relevance Medium Khipu Type Bank transfer Regions South & Central America Market relevance Medium Link Type Bank transfer Regions South & Central America Market relevance Medium PagoMisCuentas Type Buy Now, Pay Later Regions South & Central America Market relevance Medium Ripsa (Pagos) Type Cash Regions South & Central America Market relevance Medium Secure Remote Commerce (SRC) Type Wallet Regions Asia Pacific + 5 Market relevance Medium Sencillito Type Cash Regions South & Central America Market relevance Medium Surtimax Type Cash Regions South & Central America Market relevance Medium Webpay Type Wallet Regions South & Central America Market relevance Medium Amex LOCAL Type Local payment card Regions South & Central America Azteca Type Bank transfer Regions South & Central America Banco AV Villas Type Bank transfer Regions South & Central America Banco Bice Type Bank transfer Regions South & Central America Banco Bradesco Type Bank transfer Regions South & Central America Banco Caja Social Type Bank transfer Regions South & Central America Banco Consorcio Type Bank transfer Regions South & Central America Banco Cooperativo Coopcentral Type Bank transfer Regions South & Central America Banco Corpbanca Type Bank transfer Regions South & Central America Banco de Bogotá Type Bank transfer Regions South & Central America Banco de Chile Type Bank transfer Regions South & Central America Banco de Occidente Type Bank transfer Regions South & Central America Banco de Occidente Cash Type Cash Regions South & Central America Banco do Brasil Type Bank transfer Regions South & Central America Banco GNB Sudameris Type Bank transfer Regions South & Central America Banco Internacional Type Bank transfer Regions South & Central America Banco Itaú Type Bank transfer Regions South & Central America Banco LAFISE Type Bank transfer Regions South & Central America Banco Pichincha Type Bank transfer Regions South & Central America, Western & Central Europe Banco Promerica Type Bank transfer Regions South & Central America Banco Ripley Type Bank transfer Regions South & Central America Banco Security Type Bank transfer Regions South & Central America Bancoomeva Type Bank transfer Regions South & Central America Banorte Type Bank transfer Regions South & Central America BBVA Type Bank transfer Regions Middle East & Africa, North America, South & Central America + 1 BBCA Bancomer Type Bank transfer, Cash Regions South & Central America BBVA Bancomer Type Bank transfer, Cash Regions South & Central America BBVA Continental Type Bank transfer Regions South & Central America BBVA Wallet Type Wallet Regions North America, South & Central America BCI TBANC Type Bank transfer Regions South & Central America BCP Type Bank transfer, Cash Regions South & Central America BN Móvil Type Bank transfer Regions South & Central America Boloro Type Wallet Regions Asia Pacific + 5 Caja Huancayo Type Bank transfer Regions South & Central America Caja Tacna Type Bank transfer Regions South & Central America Caja Trujillo Type Bank transfer Regions South & Central America Cordobesa Type Local payment card Regions South & Central America G2A Pay Type Wallet Regions Asia Pacific + 5 Grupo Mutual Alajuela Type Bank transfer Regions South & Central America Guayaquil Type Bank transfer Regions South & Central America Interbank Type Bank transfer Regions South & Central America iupay Type Wallet Regions South & Central America Klap Type Wallet Regions South & Central America KOIN Type Wallet Regions South & Central America MasterCard LOCAL Type Local payment card Regions South & Central America Market relevance High NETELLER Type Wallet Regions Asia Pacific + 5 Pagosnet Type Bank transfer, Cash Regions South & Central America PicPay Type Wallet Regions South & Central America Provincia NET Type Cash Regions South & Central America Redcompra Type Local payment card Regions South & Central America Ripley Type Local payment card Regions South & Central America Santander Brazil Type Bank transfer Regions South & Central America Santander Domiciliación Type Buy Now, Pay Later Regions South & Central America Santander Mexico Type Bank transfer, Cash Regions South & Central America Santander Rio Type Bank transfer Regions South & Central America Scotiabank Type Bank transfer Regions South & Central America Servipag Type Cash Regions South & Central America Visa LOCAL Type Local payment card Regions South & Central America Market relevance High Santander Super Digital App Type Prepaid card Regions South & Central America Market relevance High Splitit Type Instalments Regions Asia Pacific + 5