📝 Payment Infrastructure in Latin America: PhotonPay report (Part 2)

📝 Payment Infrastructure in Latin America: PhotonPay report (Part 2)

(Beginning)

👉 The diversity of options creates a need for payment orchestration: an infrastructure layer that allows businesses to connect multiple payment rails, providers and money flows through a single system.

This layer includes:

🔹 payment routing;
🔹 clearing and settlement;
🔹 reconciliation and payment processing;
🔹 currency conversion management;
🔹 payouts and transfers;
🔹 funds management;
🔹 working capital management and financing.

In other words, the shift is from integrating payment methods to managing the entire chain of fund movements.

👉 Stablecoins as a new settlement rail. Compared with the traditional model, they allow businesses to:

🔹 reduce the number of intermediaries;
🔹 simplify access to liquidity;
🔹 reduce the number of FX conversion stages;
🔹 conduct settlements directly;
🔹 enable 24/7 settlement;
🔹 accelerate settlements.

👉 The use of stablecoins is growing across the region. The share of crypto-asset purchases made with stablecoins by country is as follows:

🔹 Mexico🇲🇽 — around 40%
🔹 Brazil🇧🇷 — 49%
🔹 Colombia🇨🇴 — around 34%
🔹 Argentina🇦🇷 — more than 70%

Overall, institutional use of stablecoins in LATAM accounts for approximately 71%, compared with 52% globally.

👉 The remittance market in the region is estimated at USD 161 billion. Various types of providers operate in this market:

🔹 Banks: trusted by users and supported by established infrastructure, but with higher costs and slower processes.
🔹 Traditional remittance operators: established brands and networks, but dependent on physical infrastructure.
🔹 Digital operators: more convenient and potentially less expensive.
🔹 Crypto: offers fast settlement and low costs, but faces challenges related to trust and regulation.
🔹 Infrastructure companies: broad B2B reach, but do not necessarily have a consumer-facing brand.

☝️ Conclusion: the next stage in the development of LATAM's payment infrastructure will be the integration of existing systems, rather than their replacement with a single new one. The future lies in a multi-rail ecosystem.

#news #background #LatAm_Finance

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