Latin America is a great revelation for local and global eCommerce that want to take advantage of a market in which eCommerce is expected to grow by 30% every year until 2025. Recent research by Ebanx (a multinational online payment processing company) reveals that eCommerce in the region will grow to reach very close to 37% over the next year. JD Duarte, an entrepreneur and eCommerce specialist from Costa Rica, explains how the market is changing across Latin America.
A report by Unctad (United Nations Conference on Trade and Development) already reported on the importance of electronic commerce for the economic growth of the region. According to the Ebanx report, the boom in the electronic business in Latin America is mainly due to two factors. First is the massive adoption of digital payment methods, payment gateways, and applications for online purchases.
And secondly, the generalization of so-called “mobile commerce,” either through eCommerce applications or social networks. The study indicates that, at the end of 2021, almost 60% of all online purchases in Latin America were paid for via cell phone. At the same time, the expansion of digital payment solutions and the emergence of new alternative payment methods have genuinely transformed the relationship of Latin Americans with payments by providing them with the most essential thing: access and inclusion.
Positively impacted by mobile commerce (which surpassed desktop purchases for the first time), retail digitization and access to alternative payment methods, Latin America has exciting opportunities. The countries in the region with the most important markets to conquer are Mexico ($49 billion), Colombia ($18 billion), Argentina ($17 billion), Chile ($16 billion) and Peru ($9 billion).
However, some Central American countries will stand out during the next year for their growth potential in e-commerce: Guatemala (60%), El Salvador (50%), Panama (40%), Dominican Republic (26%) and Costa Rica (26%) will have the highest growth.
Explains Duarte, “The most commonly used payment methods in Latin America are domestic credit cards, followed by international credit cards, debit cards, virtual wallets, online cash-based payments, and bank transfers.” The latter method has achieved the highest growth (107%), followed by domestic credit cards (44%), virtual wallets (40%), debit cards (32%), and international credit cards (30%).
The prospects for the future seem to be very good, with some peculiarities. Mexico (one of the countries that have the closest relationship with international brands) still sees cash payments as a critical ingredient for online shopping.
Although Chile offers higher rates on credit cards and Colombia is beginning to be a benchmark in digitization in the region, cash and alternative payment methods continue to be a decisive factor for many consumers and should be seen as essential by those who invest in the area. It is crucial for Latin American companies to continue prioritizing their efforts in digital transformation to take advantage of the current moment that promises more significant growth in online sales in the near future.