Key Reasons for Expansion to Latin America: Business Perspective

E-commerce is booming globally, but a focused lens has been placed on Latin America for business expansion. Why? With more than 300 million digital buyers, Latin America (LATAM) has become a hub for online business growth and expansion. Additionally, the expanding consumer market, characterised by a growing middle class and youthful demographic, presents significant opportunities for businesses to introduce new products and services. Since 2018, the share of retail e-commerce sales has grown year on year from 4% to 16% in 2024. Bolstered by high rates of smartphone penetration and internet access across the region, consumers of the Latin American market are equipped to make online purchases with digital access, growing economies, and alternative payment methods (including PIX, Elo, OXXO, Mercado Pago, and Boleto Bancario).

Brazil, Mexico, Colombia, Chile, Argentina, and Peru are the largest e-commerce markets in Latin America and the Caribbean. By 2028, Brazil’s e-commerce market is expected to grow by 80% from 36.8 billion USD in 2023. Mexico, being the second largest e-commerce market, sat at 31.7 billion in 2023, which is predicted to grow to 58.9 billion USD by 2028.

Cross-border purchasing has been a significant driver of economic growth in the region. Online marketplaces such as Mercado Libre, AliExpress, and Amazon have been pivotal in creating retail accessible to the underbanked. Accepting numerous payment methods, the marketplaces create opportunities for sellers to accept payments internationally and broaden customer pools. In 2023, cross-border e-commerce held a 14% share of the total e-commerce in Latin America and is expected to grow to 15% by 2026.

Fastest Growing Industries in Latin America

E-Commerce

Thanks to marketplace platforms such as MercadoLibre and Amazon, small and medium businesses have been given an entry point to reach the vast audience of the local markets in the region of Latin America. Additionally, consumers are increasingly shopping from international retailers, giving room for global brands to meet consumer wants and needs. More than half of Mexicans and Brazilians shopped cross-border in 2022, whilst more than 70% of Chileans and Peruvians purchased cross-border in 2022. There has been significant growth in e-commerce sales revenues in Brazil and Mexico between 2023 and 2024, with Brazil seeing more than 5 billion USD in revenue growth and Mexico seeing more than 4 billion USD in revenue increase. Unsurprisingly, with evolving consumer demands and greater digital access, the majority of Latin American countries have seen a growth in sales revenue from e-commerce in 2024 compared to the previous year.

Fintech

The presence of fintechs in Latin America is increasing, with products and services targeted at the region’s underbanked and unbanked population and bringing innovations in the lending, payments, regulation, and insurance space. Fintechs are boosting competition in the space, with new technologies and digital banks giving users access to financial tools and boosting access for small and medium businesses.

With Brazil’s unbanked population sitting at 9.2% in 2024, more than 123.77 million Brazilians use fintech products for digital commerce to benefit from the convenience and ease of online shopping. Additionally, Mexico’s use of fintech products is increasing, with digital banks and the number of users growing each year. From just over 40,000 users in 2018, the number of fintech users for digital payments is projected to reach 86,731 by 2027.

Software and Technology Adoption

Despite cross-country differences across the region, the software industry continues to grow, driven by a deep understanding of the local business environment, commercial and regulatory dynamics, and the unique needs of Latin America. In 2023, the revenue of the productivity software industry in Latin America reached 2.1 billion USD. In a region of increasingly digital consumers, the need for up-to-date, safe, and secure applications has created a welcoming environment for software and IT companies. For example, Brazil’s software market is expected to increase by over three billion USD between 2023 and 2028. In Colombia, the software market revenue is expected to reach 1.57 billion USD by the end of 2024, showing an annual growth rate of 5.57% between 2024 and 2028.

Explore our in-depth guide on payment processing in Latin America, highlighting essential payment methods and the evolving payment landscape to prepare your business to enter new markets. This comprehensive overview covers key industry sectors such as e-commerce, tourism, gambling, and fintech, demonstrating how LATAM’s digital economy is driving growth and innovation. Learn how diverse payment options, including credit cards, digital wallets, and real-time payment systems like Pix, are shaping the future of transactions in Latin America’s largest economy.

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Payment Trends

Understanding the region’s payment ecosystem is one of the first steps in establishing a successful presence in new markets, such as Latin America. Payment preferences vary significantly across countries, and adopting the right methods is critical to gaining customer trust and boosting sales. Latin America boasts access to numerous payment methods, from instant payments such as PIX to vouchers like Pago Efectivo.

Bank Transfers

PIX emerged as a revolutionary payment method in 2021, promising financial inclusion and bringing healthy competition to enhance financial services in Brazil’s local business environment. Surpassing all expectations, PIX offers instant payments, flexibility in transaction size, and convenience. In 2023, PIX held a 16% market share for e-commerce transactions, positioning it ahead of digital wallets, debit cards, and cash vouchers.

Digital Wallets and Mobile Payments

Alongside the expanding consumer market, the prevalence of alternative payment methods in the region has become more common as digital commerce rises, however, debit and credit card penetration remains relatively low. For example, credit card penetration in Colombia sat at 13.06%, and 14.53% in Costa Rica in 2024.Among Latin American countries, alternative payment methods (APMs) such as digital wallets were most used in Colombia and Brazil. In 2023, APMs held a 50% market share in Colombia, closely followed by Brazil’s 49% share.

In Mexico, mobile wallet users have grown year-on-year since 2020. MercadoLibre’s Mercado Pago is a popular mobile payment service that is used online and in-store. As one of the leading payment platforms in Latin America, users can place orders online with local credit cards, cash vouchers, and bank transfers. In February 2024, Mercado Pago was the third most used mobile payment service in Brazil, used by 44% of the population. Mercado Pago users are expected to rise from 25.5 million in 2020 to 40.6 million by 2025.

Looking at other payment methods, PicPay is the most popular e-wallet in Brazil and is the most used mobile payment system. Its popularity among Brazilian consumers places it 6% ahead of Mercado Pago and 24% ahead of Google Pay in 2024.

Cash

Cash-based payments remain a popular method among many consumers, with Boleto Bancario (Brazil) being one of the most popular. This method allows customers to pay for online purchases with cash at local banks, ATMs, or post offices and gives digital access to those without bank accounts or credit cards. Similarly, in Mexico, Oxxo allows customers to pay for online purchases in cash at Oxxo convenience stores, which are widely available throughout the country at more than 21,000 locations.

Credit and Debit Cards

Throughout the local market in the region, credit card penetration is lower than that of debit cards. However, Chile and Brazil have higher rates of credit card use, with 62% of Brazilians using credit cards compared to 56% using debit cards in 2023. Similarly, 23.56% of Chileans used credit cards in 2023, which is significantly higher than Colombia’s 13.11%.

Businesses expanding their online presence to the region need to consider consumer preferences in order to reach their target market. Latin American consumers have shown a thirst for digital-friendly and instant payments.

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