In this next article about Latin America countries that we do business in, we look at Argentina. It’s a smaller part of our portfolio, but in terms of growth and opportunities it nevertheless has a bright future.
Market overview of Argentina
Although Argentina is one of the better known countries in South America, mainly due to the world-class Football team and the beautiful capital of Buenos Aires, it is even smaller than Colombia when it comes to the population: Only 45m inhabitants vs. 50m in Colombia.
Although there are 10% less people in Argentina compared to Colombia, we see nearly 20% less online shoppers, 18m people. But that number is not small by any means – online shopping accounts for nearly 8b USD of revenue and is expected to double until 2022, when it will catch up with and be on par with Colombia for that matter. The data shows that the usage profile shifts away from desktop to mobile devices as being the major platform of use until 2023.
Many LATAM countries push to make internet connections available for their population and so does Argentina. It shines with a penetration rate of 93%, the highest in the region, and three quarters of the population using a smartphone to access the internet.
The top three online selling products in 2018 have been in the sectors travelling, clothing and mobile phones. An interesting dynamic can be seen in the age group of 16 to 24 where people mainly choose brands that support social causes. Like in Colombia approx. 80% of households opt for installment payments for their e-commerce purchases.
Payment landscape in Argentina
The Argentinians rely heavily on credit card payments which account for 80% of the transactions. The split between domestic and international cards is 60:40. That’s a dramatic difference to Brazil and Colombia where only 50% of the transactions are settled with credit cards. The second-biggest type are cash payments that cover 15% of the overall share. The rest of the types add up to be just 5% of the distribution, and this shows us that Argentina is not very developed when it comes to financial innovations like online banking and wallets.
When it comes to credit cards, we support all majorly used types in Argentina, like VISA, Mastercard or Argencard. As for cash payments Pago Fácil and Rapipago are the biggest providers in the country and are covered by our payment service solution as well. We also cover all major bank systems like Santander, Galicia or Banko Nación. Our suite offers a gateway to 250+ payment methods – growing by the week.
Argentinian market in the future
Argentina belongs to the countries in the world with the highest growth rate of online shopping and digital payments. The compounded annual growth rate of revenue is expected to hit an average of 12% for the next 5 years. In 2020, it even has been the country with the highest e-commerce-growth in the world compared to 2019 – 79%. Only Singapore came close to this number, and the neighbor Brazil only reached 35%. The main reason for this is that Mercado Libre, a retailer giant in South America, pushed for expansion in the region, supported by the effects of the Covid-19-pandemic.
The segment with the highest revenue numbers is consumer electronics with a volume of over 2bn USD in 2021, although mainly driven by offline sales with online being placed 9 behind the already mentioned travel, clothing and phone sales. Within the next 5 years the user penetration when it comes to e-commerce-shopping is expected to rise from 58 to 62%. Interesting to compare is the average revenue per user which amounts to 256 USD. In Brazil the number is nearly double with 461 USD. This is due to the lower purchasing power parity in Argentina that has been influenced by currency devaluation and the shrinking economy.
Growth of PayRetailers in Argentina
The shift towards a more digital world in terms of trade is a huge push towards economic growth in the coming years, with many advantages for the people and merchants in the region. Even with all other promising numbers left out, in Latin America the growth of the percentage of digital buyers for 2021 is the highest in the world with 6.9%, followed by the developing regions of the Middle East and Africa (6%) and Asia Pacific (5%). Only this shows a massive potential for merchants to enter the market or expand their presence.
We can say that overall, the numbers show that Argentina is a growth leader in LATAM in respect to many sectors, and PayRetailers will help businesses to enter and grow in this thriving market. If you are interested in our one-API-fits-all solution, please contact us.