Digital payments have grown rapidly in Latin America, where a large percentage of residents have actually never had a bank account. But the systems need to be coordinated for visitors to really cash in on it.
Digital wallet transfers, QR codes, and even contactless credit or debit cards were a rarity outside of hotels and resorts. But they’ve become more prevalent in recent years throughout the region, with travelers coming back to Latin America finding digital payments are accepted by vendors at locations such as the beach and artisanal fairs.
“Checks in South America have all but vanished. Most payments are online, by phone or debit cards,” said Juergen Keller, the CEO of Seattle-based travel agency South America Travel. “Contactless is the rule.”
Edward Welham, the customer services manager for United Kingdom-based travel agency Journey Latin America, has also seen growth in cashless tourism.
As an Inter-American Development Bank study revealed in 2020 a 67 percent year-over-year increase in mobile bank accounts throughout Latin America, the use of QR codes has grown significantly in the region. Pix, Brazil’s Central Bank QR payment tool, attracted 100 million users — 60 percent of the country’s adult population — in its first 10 months. Meanwhile, Argentina-based digital payment company Mercado Pago has 20 million active users in the region, processing more than 8.5 million QR payments in Argentina alone since it started offering such services in 2018.
So how has the rise in contactless payments affected tourism in Latin America? It’s sparked a significant jump in international transactions, which doubled throughout the region between March 2020 and the same month two years later, according to a report by Visa Consulting & Analytics, the credit card giant’s payments consulting division. Contactless payments also grew by 53 percent in that two-year period, which VCA analysts attribute to the larger adoption of technology in the region.
While being able to increasingly make to digital payment represents one less worry for travelers, travel companies face other financial challenges when doing business in the region. Keller mentioned that international money transfers to Latin America from the U.S. can be burdensome, adding that South America Travel’s staff sometimes has to take a form to a bank in the U.S.
And as Welham views operating in countries with dual currencies conversion rates like Cuba — where digital payments are still a no go — as challenging, the IADB maintains that cash is the preferred method of payment throughout the region. It’s is home to a large unbanked population as well as financial systems that have to be coordinated.
Have a confidential tip for Skift? Get in touch
Photo credit: Travelers are finding more ways to make digital payments in Latin America Christiann Koepke / Unsplash