The promising future of digital payments for Latin America and the Caribbean

Throughout my more than two decades of working at Visa, I have never seen such rapid adoption of new payment technologies by consumers, businesses, and financial institutions in Latin America and the Caribbean (LAC). We have achieved unprecedented levels of growth in the penetration of our most popular payment technologies thanks to the growing desire of our consumers for convenience, immediacy and peace of mind when paying for goods or services, as well as the desire of companies to obtain the benefits of receiving digital payments.

The examples are clear: consumers are increasingly using contactless payments, micro and small businesses are using their smartphones to receive digital payments, financial and digital inclusion is growing alongside the adoption of digital payments in transport. In urban areas, e-commerce continues to grow steadily, security continues to grow with the rise of token technologies, and consumers are increasingly transferring funds to each other using digital technologies.

Digging a little deeper into this significant moment, what has helped us enormously to achieve these results is our continued emphasis on understanding consumer needs and priorities, and a strong focus on solving the unique needs of our clients in different markets, working closely with our industry partners and financial institutions to bring all of these technologies to market. These two fundamental elements have allowed us to accelerate the digital transformation of the entire payments ecosystem and coincide 100% with the reflections that LAC clients have recently shared with me and with colleagues from other regions of the world.

The path is clear and his pace remains fast. Take for example the Tap to Pay functionality (contactless payments), where Visa has been one of the main drivers of the implementation of this technology worldwide. We very recently reached 50% penetration of contactless transactions in LAC, in just four years since we started implementing the technology. This means that across the region, more than half of in-person Visa transactions are contactless. In most of the key markets the penetration is even much higher. We have also seen healthy growth in other metrics in the region, including a 69% growth in contactless transactions as of December 2022, compared to December 2021.

What we're seeing here is that once consumers try contactless payment technology for the first time for their everyday errands, there's no going back. They love technology because it's fast, safe and convenient. Consumers simply hold their contactless card, mobile phone or wearable device close to a payment terminal to pay for purchases in seconds. And the same is happening in the public transport segment with Tap to Ride (use of contactless technology in public transport).

We've seen impressive growth in recent years with Tap to Ride technology, which works with your contactless card, cell phone, or wearable device approaching a payment machine before boarding a bus, subway, or other transportation system. transportation where this new technology is offered. We recently passed the milestone of one billion transactions in public transportation systems around the world in fiscal year 2022. Our urban mobility transactions in LAC have also grown 75-fold since December 2019. We have launched 22 urban mobility projects in 10 cities and 7 countries for public buses, metro systems and tolls, and this year we will launch many more. This is exciting, particularly in LAC where the transport segment has a key role in driving digital and financial inclusion.

Along the same lines, we have Tap to Phone, a solution whereby small businesses can simply download an app to their smartphones, which instantly turns them into contactless terminals to easily accept payments. We are also at the forefront of accelerating this implementation with more projects under development in LAC and other parts of the world. Together with our partners, we have managed to enable more than 250,000 mobile phones as terminals and affiliate more than 25,000 businesses in Brazil, Costa Rica, Guatemala, Peru and, very recently, Colombia.

Another crucial area that is seeing accelerated growth in the region is e-commerce, where we have made great strides in digitally enabling more than 40 million micro and small businesses around the world by the end of fiscal year 2022 with a variety of digital platforms and tools to help them start selling online. Cybersource, a Visa solution for accelerating secure online commerce, has also played a key role in bringing together thousands of acquirers and merchants in the region to accept digital payments in the e-commerce space, while effectively managing the fraud detection, leading to higher consumer satisfaction and more online sales.

But with all these advances comes a growing obligation to protect digital transactions. What we are seeing now is accelerated token adoption in the region, and we expect this to have a very positive impact on our issuers and merchants in terms of fraud. With Visa's token technology, transaction data is protected by replacing sensitive cardholder information with a unique digital identifier or token that can be securely embedded across multiple devices or stored in the cloud. In fact, by the end of September 2022, more than 90% of Visa payment credentials in LAC were token-ready, and we recently passed the historic milestone of issuing more than 4 billion tokens worldwide, surpassing the number total of our physical cards in circulation, which is also incredible.

I also want to highlight our growth performance in the real-time money transfer segment. Visa Direct, our solution for sending or receiving money almost instantly in or out of the country between people (P2P) or companies (B2B) where the programs are active, grew by more than 35% by the end of the year fiscal 2022, reaching almost 6 billion global transactions. In LAC we continue to lead this space with Visa Direct programs already launched in 11 countries as of December 2022, and if we analyze it by country, we have more than 25 domestic and cross-border P2P relationships.

All these results are incredible and give us an idea of what is to come. Our track record of breaking down barriers and connecting more people in the global digital economy is more alive than ever. This also highlights an important point which is the responsibility we have to continue to pioneer payment technologies to help drive the new innovations that we believe will shape the future of money movement, including increased interoperability, digital identity, open data, contextual commerce. , Web3, new models like the creator economy and the Metaverse.

That is why the future is bright for Latin America and the Caribbean. With our industry leadership and influence, we have a unique perspective on how payments are evolving, and this inspires us to continue accelerating and scaling the adoption of more accessible digital technologies to help everyone thrive and unleash the power of digital commerce. for everyone, everywhere.

By Eduardo Coello, regional president of Visa Latin America and the Caribbean.