💳Mastercard in Latin America shares perspectives: The new report highlights trends in the digitalization of remittances.

💳Mastercard in Latin America shares perspectives: The new report highlights trends in the digitalization of remittances.

The industry study of the region's payment focuses on the markets of Mexico🇲🇽, El Salvador🇸🇻, Guatemala🇬🇹, Honduras🇭🇳, Brazil🇧🇷, Argentina🇦🇷 and Colombia🇨🇴. It was carried out from October to December 2023, and in addition to collecting data from public resources, includes 10 in-depth interviews with 6 companies (banks, traditional and digital IPOs, retailers, mobile providers and representatives of Mastercard divisions).

➡️ Overall, since 2014, remittances in Latin America have grown annually by 10% — while in the rest of the world growth was only 4%.

➡️ The U.S.🇺🇸-Mexico corridor is the largest remittance channel in the world, handling a fund volume of 65 billion USD in 2023.

➡️ In Guatemala, at least 1 out of every 3 households consider remittances as their main source of income.

➡️ In Honduras, remittance recipients make up about 50% of all households.

➡️ In South America, inflation and political instability in the region are drivers of migration and remittance flows, which often use fintech and blockchain to avoid problems with the traditional system.

➡️ Opportunities for digitalization are limited by a lack of transparency and trust in the system, as well as by the slow speed of transactions (4G is not available everywhere). In addition, regulation is one of the most serious issues, given the gaps in legal, regulatory and operational consistency in local jurisdictions.

➡️ It can be said that, in general, remittances have reached their historical peak, declining in favor of digital options.

➡️ The year 2024 will mark the transition to greater speed, simplicity and security, as digital remittances begin to surpass the sending of physical funds across borders.

Recommendations for providers and market participants:

👉Adapt digital solutions to the cash environment.

👉Companies should clearly communicate prices BEFORE making the transaction, as well as indicate expected settlement times.

👉Reduce processing time with digital KYC (know your customer) tools.

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