Reflections on Payment Channels that 2020 Has Brought for us
June 01, 2020
4 min read
Although we currently are in an information world in which we are exposed every day to extreme points of view, which make our emotions oscillate between the worrying and the amusing, the cultural and the hopeful, the following paragraphs were written to share some reflections regarding the evolution and perspectives of electronic payments in Latin America.
Closing 2019, Same Shapes
At the end of last year, the adoption of digital payments in Latin America did not show significant advances. Although the growth of electronic commerce in the region has been increasing with double figures for the last 3 years (20% increase in annual sales, between 2017 and 2019), digital payments have been mainly adopted by bank users.
However, we now know that we were about to see a change in the way in which we made our payments.
A Life with Adjustments
We already know the story that 2020 has started to tell us, which demands from us a change in our daily life habits, and covers a variety of areas that involve both work and personal matters, including behavioral patterns, mainly related to our consumption habits.
Faced with a restricted mobility environment, the first aspect that we have had to modify is the way we buy. Apart from visiting local supermarkets complying the health protocols that each country has established, we have had to adapt ourselves to buy many items online. This behavior might not have been so common for many of us, but it has become the forced solution to this situation.
This is apparent when we see all those who prepared themselves for confinement by buying equipment for exercising at home, those who built up a medical arsenal, those who filled the stock with pet food, or those who pampered themselves by supplementing their pantry with everything they needed to cook the type of desserts or dishes that give us an immediate reward, and of course, we cannot forget those who went to the section of spirit drinks.
But as some products have caught all our attention, others have lost their appeal at this moment, and they are all related to what the current circumstances are limiting us from enjoying. In this way, purchases of travel items, car accessories, and swimwear, as well as party supplies, mountaineering gear, etc.
After provisioning ourselves with the necessary resources to face this confinement in the best way, we have all the obligations that every household requires our devoted attention: paying primary services, bank cards, loans, taxes, governmental formalities, etc.
Before face-to-face restrictions, we have had to look for ways to pay online to be able to cope with our responsibilities to this respect. For those who were already familiar with this trend, they are doing fine. For those who were not prepared, they have had to look for some family member or friend to teach them, or learn by themselves how to make these payments.
All businesses or private or public service providers has faced this urgent need to sell or collect resources through electronic media. Every day, companies are creating online platforms, and governments have had to modify laws and regulations to enable payments through this way.
Reality is plain. Electronic payments are no longer an supplementary option or a test channel for selling or money collection, they have simply become the most viable option for the vital interaction between providers and users.
Is Currency Dematerialization Real?
Although this scenario shows that, in the long term, we will go towards this trend, the reality of our countries also show us that there are still many challenges to face. In view of the low bancarization, the high informality of money habits, and most users’ mistrust of these remote payment methods, the road will not be followed immediately. This is why today some alternatives between these two worlds (Digital vs. Cash) are gaining much ground in our markets.
Online payments made in cash in supermarket chains, convenience stores, and pharmacies, are growing at the same speed (a double-digit annually) than the adoption of e-commerce in the region. This is why we are going to see a gradual mutation in our payment habits as we advance towards trust, knowledge and protection of all users.
Kushki in Latin America.
In spite of the circumstances that affect us all at this moment, for Kushki it has been a lucky trip that has allowed us to be part of this evolution in the whole region. We have witnessed stories that engage us completely when participating in aid campaigns for the trade sectors (Peru), incorporating electronic payment methods for governmental entities (Colombia) and municipal governments (Ecuador).
This situation has demanded us to develop new methods for money collection (such as our payment links) that facilitate the incorporation of online payments without the need for an integration. On the other hand, our service indicators have multiplied and our integration area has had to increase their efforts to deal with the scale of businesses that now need, more than ever, our support to enable online payments in the region.
At Kushki, we are working to generate better solutions and payment methods, as well as agile support processes. Especially, we are listening to our customers; for them, we are striving to become the payment gateway that connects all Latin America.