Local knowledge of regulations and payment preferences is the key to success in Latin America according to industry experts.
Kamran Hedjri, Founder and Group CEO of PXP Financial, and Constanza Muñoz Torres, Chief Legal Officer at ProntoPaga, offered these insights on a webinar for SBC’s latest Digital Innovation Day titled ‘Latin America payments considerations within the newly opened markets’.
Hosted by SBC Noticias Senior Journalist, Fernando Noodt Molins, the pair began by stressing the need for local knowledge given the fragmented nature of the Latin American regulatory landscape and the range of currencies used in the region.
Muñoz said: “Any operator that wants to join any Latin American market or any specific country should study the rules and should keep in mind the anti-money laundering rules that govern the country and also the consumer protection legislation that applies.”
“The second really important point for any operator that wants to enter the Latin American market, it’s to keep in mind that Latin America is huge, and it has many, many different currencies.
“The third [piece of advice] I would give to an operator is to keep in mind that you have to build consumer trust. The reality in the different countries could be very different and therefore you have to know the local situation and you have to build a consumer trust keeping in mind the reality of the country.”
As well as globally recognised payment methods such as PayPal, Google Wallet and Apple Pay, consumers in Latin America also utilise many different local payment options. By far the most popular is Brazil’s Pix, which currently has built up more than 200 million registered users in just a few years of activity.
Muñoz explained how the rise of payment systems like Pix has helped to improve the speed and costs of payments. She cited the example of when Estelarbet launched in Chile, it would take up to 72 working hours for players to receive the money they withdrew from the operator.
That time has been reduced to seven minutes, and withdrawals are sometimes even available instantly.
Speaking specifically on the impact of Pix in Brazil, Hedjri added: “What Pix has done is manage financial inclusion. It has got all the wallets connected to it and you can use your phone or you can use multiple ways of accessing the system, and that is more inclusive.
“You don’t necessarily have to have a bank account in order to do it. It’s created an opportunity for financial inclusion. If I’m not mistaken, for the consumers the transfer is fast so the cost is very efficient. And also integration into the ecosystem has been done in a good way.”
Another consideration for the payments sector in Latin America is the use of crypto, which Hedjri believes is more “accessible and understood” in Latin America compared to Europe.
However, given the relative newness of crypto as a currency used for payments, Muñoz explained that regulation in the area within a lot of Latin American countries is somewhat of a “grey area”.
Given the advancements in payment services in recent years, it is not always easy to predict how the fintech sector can further innovate.
To end the discussion the panellists were asked to provide any final thoughts they had on the future direction of Latin American payments.
“There is a lot of space for innovation for improvement,” Muñoz projected. “We saw from the Brazilian experience that it’s possible to have a great product at fair prices.
“I believe that any great fintech could truly change the way payments are done by pointing towards globalisation. I think that’s the ultimate goal. We need to point towards access to payments for everyone and that is what [ProntoPaga] wants to achieve.
“I believe that we’re at a great moment regulatory speaking and technologically speaking to achieve that goal.”
