The financial growth LatAm countries are facing at a considerable speed requires the payments industry to align with market changes, the diversity of regulatory frameworks and technologies available; demanding a great deal of adaptability at the pace these changes occur
On regulations, a separate chapter would be necessary to cover the variety of realities that make up the continent. However, all regulations around the globe are based on the same principles: customer protection, financial security, anti-money laundering and systemic risk. Based on these principles, regulations try to protect and prevent those risks, hence payment institutions or companies that run financial businesses are obliged to follow rules and procedures that reduce them.
Regulators try to always rule based on what happens in other countries, reducing and preventing fraud and anti-money laundering transactions under their own systems. LatAm regulations tend to be some years behind developed countries' regulatory frameworks, but instead of trying to avoid suffering the same situations and scenarios other countries have been through, they tend to make a copy of them without learning from the errors made by other countries. This opens up a window of opportunity for companies that can anticipate the direction of evolution at a faster speed than governments and regulators.
On the other hand, payment providers also need to focus on the quality of the service and products they offer, and user demand for fast and secure ways of paying through an excellent user experience flow. This shouldn’t be put aside. Keeping a balance among all these variables might be one of the biggest challenges ahead.
Player preferences on the usage of cash or digital payment methods differ from country to country. This depends on how developed –financially speaking – each country is. No doubt cash is still a big player in emerging markets and that is a key issue to consider when offering a payment solution. However, the world tends towards digital channels, offering clients instant, easy and secure ways of paying for their goods and services. It is worth noting the impact the pandemic had on the acceleration in the use of digital money worldwide, and Latin America is no exception. The adoption of certain trends is not automatic, and it is subject to cultural and ideological issues in many cases. The governments of developing countries do not always keep pace with trends or technological developments.
LatAm offers an array of opportunities to those who take the time to understand the specificities of each country. As previously mentioned, many times the obstacles to the payments’ ecosystem are due to cultural issues or the country’s tradition. Therefore, it is paramount for companies to know their market, understand it and be able to meet its needs and sort out the barriers.
The biggest challenge payments companies face is to be aligned with customer needs, regulations and new or trending payment methods, in a timely manner. PIX in Brazil is a good example to mention. Brazil has recently launched an instant payment system, PIX, as an alternative payment option. It has become the most popular payment method in the country. PIX was created by the Brazilian Central Bank to allow instant payments, 24 hours, seven days a week. This is a typical situation where the demand has to be accompanied by new options and provide users with the payment method that is trending and mostly required.
Each market and each region has its own particular needs, so the focus should be on satisfying those. Providing clients with popular payment methods or solutions that are tailor-made to their needs is absolutely paramount.