Latin America Outpaces Asia In Super App And Digital Payments Innovation
Latin America is transforming payments globally via innovation and new partnerships.
In a recent interviewI Karen Webster and PayU Latam CEO Francisco Leon, the platform’s continued investment in innovation in cross-border and local payment systems is paying off despite an economic slump.
“When I compare growth rates between what is happening with cross-border merchants versus local merchants, we are growing 14 times faster than local merchants,” he said. “It means that those services are creating value for consumers.”
He stated payments systems, financial institutions, and technology providers must increase velocity as Latam consumers use eCommerce more.
“This is part of the investment that we have been doing during the last few years. We were investing a lot in our technology, our availability and the capacity of the platform. One thing that is very important in online purchases is latency. We are trying to be the fastest provider.”
It also supports Latam’s transformation into a big payments laboratory with real-time payments like Brazil’s Pix and Colombia’s Treinta. A good variety of customer payment preferences is key.
“When we see the full picture where we have cross-border merchants but also local merchants, specifically in Colombia where we have a very high market share, you have to combine both traditional payment methods and the most available platform in terms of technology, combining that with the reality of each country,” he said.
Consumer and SMB Superapps Proliferate
Latin America, second only to China in super app creation, has a high smartphone penetration and is a perfect testing ground for novel quick payment methods, from P2P to “person to merchant” (P2M).
“Based on what happened in China and what we were seeing with different big eCommerce [developments] around the world, I think this trend is coming to Latin America,” he said.
He pointed to PayU’s work in Colombia with the Treinta super app for small and medium-sized businesses (SMBs), saying, “This trend is going to grow and is going to have success in the region. They’re growing, they have more than 4 million small and medium businesses, and they’re creating that cooperation ecosystem with the different actors that can provide and add more value to the merchant.”
Leon noted the popularity of the consumer super app Rappi and the creation of a new category of super apps for companies to connect to services, partners, and more throughout Latam.
“If you have a super app for consumers and a super app for merchants, and they want to combine different services, this is going to be something easy,” he said. “If you have a good payment provider under you, you’re going to have the perfect match. This is part of what I see in the future.”
This is part of the tech-forward trend of Latam, where high smartphone penetration and vast numbers of underbanked and cash-reliant customers push toward new digital services and payments to close the gap.
Co-Power
The Latam digital linked economy relies on ecosystem players cooperating more.
“From the PayU side, we always think that we need to see how to collaborate with different partners across the region, trying to bring expertise to our service and maybe to add value that way,” Leon said.
In 2023, especially for major banks who generally strive to join part of the payments ecosystem, they’re thinking now that maybe it’s better to work with a payment provider that already has the skills and the knowledge.
A rising payments technology tide lifts all boats, allowing players to focus on their strengths and recruit partners.
“PayU is good at payments,” he said. “This is our core business, and this is where we want to be the best platform in the world. And additionally, keep this innovative spirit to add value for our merchants. You also want to create added value [for consumers], and you can do it [by] collaborating with all the systems to give you a better time to market.”
