In Latin America, the pace of adoption of contactless payments is still far from ideal. The use of cash is predominant in 85% of transactions in the region.
It is interesting to note that the same consumers who use cash are increasingly adopting electronic commerce. In fact, online shopping grows at a rate 2.5 times faster than purchases in physical stores in Latin America, a sign that consumers seek the convenience of shopping with a few clicks without leaving the comfort of their homes.
When cash is still the dominant form of payment, it is difficult to speak of an optimal online shopping experience. According to a study published by the consultancy Statista, 35% of consumers who buy through the Internet in Latin America pay for their purchases in cash at the time of delivery.
In Brazil, the largest market in the region, “bank tickets” (deposit slips) are responsible for 3,700 million transactions per year or 25% of all payment transactions in online purchases.
That’s where the contactless payments come in. There is a direct correlation between the use of non-contact payments and the reduction in the use of cash. When consumers become familiar with the ease and convenience of paying for their purchases by simply bringing their card to the terminal, the replacement of cash for electronic payments is a natural consequence.
The effects of the elimination of cash and the digitalization of payments in society are numerous, but one that stands out is the promotion of the financial inclusion of millions of people currently excluded from the system.
With the development of new technologies that guarantee the security and integrity of online payments, such as tokenization and the use of biometric data for payment authentication, the line that separates physical payments from digital payments will become even more fragile. A consumer familiar with the use of contactless cards to make purchases in traditional businesses will be more likely to migrate to a wallet to perform transactions in the virtual world.