📝 Payment Infrastructure in Latin America: PhotonPay report (Part 1)

📝 Payment Infrastructure in Latin America: PhotonPay report (Part 1)

The report examines Latin America’s transition toward a multi-rail payment model, in which traditional fiat systems are complemented by digital payment channels.

☝️ Preamble: payment infrastructure in Latin America is developing rapidly, but the region remains fragmented. Several countries have established advanced national payment systems, while cross-border interoperability remains limited. For international companies, this means working simultaneously with multiple local payment methods, payment service providers and currencies.

👉 The market is moving toward a multi-rail model: the simultaneous use of bank cards, A2A payments, digital wallets and cash.

🔹 The volume of e-commerce payments during 2025-2030 could increase from USD 218 billion to USD 335 billion.
🔹 The volume of POS payments over the same period could rise from USD 1.6 trillion to USD 1.9 trillion.
🔹 A2A payments are showing significant growth.
🔹 Digital wallets are expanding the scope of mobile payments.
🔹 Credit cards remain relevant due to installment payments; cash is also growing, but slowly.

👉 National payment systems have emerged in several countries across the region:

🔹 #SPEI in Mexico🇲🇽;
🔹 SINPE in Costa Rica🇨🇷;
🔹 #Pix in Brazil🇧🇷;
🔹 Transfer365 in El Salvador🇸🇻;
🔹 #SPI in Paraguay🇵🇾;
🔹 various systems in Bolivia🇧🇴, Colombia🇨🇴, Chile🇨🇱 and the Dominican Republic🇩🇴.

These systems have significantly accelerated the digitalization of individual national markets. However, the development of domestic payment rails has not solved the problem of cross-border interoperability.

👉 Cross-border payments remain the main challenge. Efforts to address it have progressed through three stages, using different instruments:

🔹 central bank clearing mechanisms;
🔹 settlements in national currencies through initiatives such as SML and SIP;
🔹 modern digital infrastructure and payment rails.

👉 Payment fragmentation increases the cost of international trade.

It involves additional fees, foreign-exchange costs and more complex settlement processes. According to an IMF analysis, a 1-percentage-point reduction in transaction costs is associated with a 15.2-percentage-point increase in trade flows.

👉 For merchants, not only cross-border transfers are important, but also support for local payment methods, which can significantly affect conversion and cart-abandonment rates. An EBANX test showed that a unified payment form for all countries performs worse than offering a selection of familiar local payment methods.

#news #background #LatAm_Finance

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