The mobile money market is taking giant strides and expanding its horizon, especially in growing economies. The growing stature of mobile money can be analyzed by the fact that in 2032, it is expected to reach a whopping $816.6 billion from $89.8 billion in 2021.
The reason behind the popularity of mobile money is its safe and verified payment structure. Also, secured transactions have enabled mobile money to have a strong presence in the LATAM countries.
Historically, the opportunities for growth in mobile money in LATAM countries have been limited. There are several unbanked populations in the Latin American region, so the digital commercial ecosystem is very low here.
In hindsight, a greater number of unbanked populations means the chance of growth in digital payment systems is huge. Therefore, here we will discuss the main reasons behind the expansion of mobile money in the Latin American region. In addition, we will understand in detail the main factors that have been the main driving factors behind the expansion and what is the future of mobile money in Latin America.
Factors Driving the Expansion of Mobile Money
The use of mobile money is steadily picking up speed as far as the adoption rate in Latin American countries is concerned. One of the main reasons behind it is the growth and escalation of technology in the financial sector. Moreover, mobile money also sizable impact on financial resilience in LATAM households during tough times. To explain the expansion better, we have listed a few top factors driving this change; let's have a look.
Better, Enhanced Security
Most regions in the LATAM countries are still in the nascent stage of using mobile money or, for that matter, any digital financial services. Although in a post-pandemic world, countries such as Brazil, Peru, Columbia, Mexico, etc., have made giant strides in using mobile money as the method is laced with better, enhanced security features.
Be it using NFC technology or QR code payments; mobile money will enable the users to keep track of transactions in real-time without fearing their data getting lost or misplaced. There are still a number of people who are using mobile money through Communication Service Providers (CSP) as they consider them more trustworthy, affordable, and secure.
As mobile money facilitates formalization and transparency, its overall impact could be far-reaching in the economies of the LATAM countries. A matured mobile money ecosystem with better data security features can help in the integration of informal sectors into formal banking. The safe and securentegrationic transactions fostered by mobile money can also assist the government in implementing stronger social protection schemes.
More Speed than Traditional Methods
Cash, cheque, credit, and debit cards are some of the most widely used traditional means of making payments in the Latin American regions. Moreover, there are several LATAM countries that are successfully implementing the mobile money ecosystem as it is faster than the traditional modes of payment.
For example, Argentina rolled out Tranferencias 3.0 in November 2021, which facilitates QR code payments and NFC technology. This instant payment system has had a good uptake since its rollout and has garnered better numbers in the past six months. In addition, there has been a tremendous rise in using biometric payment methods as well. It uses facial recognition, voice recognition, iris scanning, or fingerprint recognition to foster a more instant yet authentic mode of payment.
Therefore, along with better speed than the traditional modes of payment, mobile money also renders better options for making secured transactions to the users.
Improved Financial Literacy
The banking and payments market in the Latin American region has as many as 14 unicorns, more than 1/3rd of the total that is operating. Our readers must be thinking, why are we talking about the fintech unicorns when we have to converse the state of financial literacy in the LATAM countries. Well, these leading fintech unicorns have been the driving force in improving financial literacy and giving people access to new modes of the payment system.
The use of technology has made the financial sector more transparent than ever. Moreover, as digitization is still in its growing stage in LATAM, it has allowed the companies to penetrate the market more and make people aware of the different means that they can use for money transactions.
The government bodies are taking an active interest in implementing both online and offline strategies to boost financial education and assist in the growth of the mobile money customer base.
Why is Latin America a ‘Goldmine’ for Mobile Money?
Due to the better financial inclusion, it is safe enough to say that Latin America is the 'Land of the Rising Sun' as far as mobile money is concerned. We have listed some concrete factors to support our statement; here we go:
The Rise of the BNPL Structure
The BNPL (Buy Now, Pay Later) is a rapidly growing trend in the Latin American Economy. In simple words, BNPL is a mode of purchase where people can buy small to mid-range products and make payments in easy installments without any interest or extra charges.
Through BNPL, people living in countries where the unemployment rate is high are still able to obtain durable products and keep the wheel of the overall economy rolling. In countries such as Mexico, there are some leading companies that render BNPL solutions using different information such as telecom data. This process allows people, even from the informal sector, to gain benefits from the BNPL structure.
Huge Unbanked Market
There is still a large population in the Latin American region that is devoid of any banking facility. They largely use cash as their means of payment, but this situation is changing very fast. As a large unbanked population is a problem, it also can be a huge opportunity for expanding a new digital financial culture, and mobile money can play a huge part in it.
In addition, more than half of the Latin American population is aged between 18 and 44 years. Thus, as the population is young and more exposed to technology, it would be easier to educate them and mold their financial habits to the digital space.
MobiFin Elite Rendering Futuristic and Secured Mobile Money Solutions
For LATAM countries where digital financial solutions are still at their nascent stage, it is necessary to have a comprehensive platform that allows the users to easily send and receive money. MobiFin - Most Secure Digital Financial Services Platform provides a gateway to cashless/digital payment through an integrated unified solution. Also, MobiFin simplifies mobile money transactions as it can handle huge amounts of traffic with zero system downtime.
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