In June 2022, BBVA Mexico had become the first bank in Latin America to announce the rollout of biometric payment cards. Following launches in card-loving France and Switzerland, the world has been favorably surprised to see Mexico as alongside launch.
But reconsider. Latin America makes itself known within the fintech world. In recent years, it became among the world's most active regions for that industry, with over half a billion US dollars raised for fintech start-ups in the first half of 2022.
Now, the entire region has strong ambitions to carry on this momentum in payments and fintech innovation, moving from a cash-first ecosystem towards a brand new chapter for banking and payments.
Evolving a legacy
Latin America has historically seen relatively high unbanked or underbanked populations. For instance, the estimated unbanked individuals in Mexico and Brazil are 42 and 34 million respectively, that is a staggering 32% and 16% from the overall population
However, the past few years have seen significant and rapid change. The proportion of unbanked citizens in Costa Rica dropped 8 % between 2022 and 2022. Argentina's fell by eight percent, Colombia 18% and Brazil an astonishing 73%.
Many put this right down to the fintech revolution. It is establishing a smarter payment ecosystem and the region's banking sector is providing the latest innovations and experiences to customers to establish new amounts of trust.
Take Mexico, where openings of digital wallets and patronage of neo banks have become by 30%, while electronic transactions for example bill payments and money transfers have soared by 80%. In July 2022, the amount of digital accounts in Brazil topped 200 million, and according to the Bank of the usa, May saw 21 million Brazilian banking apps and digital wallets downloaded. In Colombia, according to BBVA Research, the number of mobile banking users is expected to increase by 721%, to fifteen.6m, in the decade to 2025, up from 1.9m in 2022.
And Latin America shows no manifestation of slowing down.
Catching track of contactless
As the region's banking sector serves previously unbanked citizens and payments technologies proliferate, the cash-first economy is eroding. In Brazil, using payment cards grew 8.2% in 2022, topping two trillion transactions.
Much like the rest of the world, Latin America individuals are migrating away from cash and PIN pads towards contactless, attracted by the frictionless and hygienic payment experience. Brazil saw an amazing 469.6% development in contactless payment value between 2022-20 as a result.
According to Mastercard, 80% of card providers across Latin America now offer contactless cards, and 84% from the region's consumers believe they are a cleaner way to pay. Also, 79% of shoppers felt contactless payment cards were more secure than cash, and other alike numbers intend to keep using them for that near future.
Despite the strong growth in contactless, consumers are concerned about the risk of fraud if their cards are lost or stolen, and lots of are still confused about varying payment limits in the POS.
Touch, tap, trust – building confidence with biometrics
Over recent times, Latin America’s central banks have developed policies to support increased financial inclusion. One priority: ensuring consumers go through the benefits of payment innovation.
Given the high proportion of previously unbanked consumers, establishing trust is going to be important aspects in maintaining momentum behind the evolving fintech and payment sector in the region. Biometrics includes a role to experience. In lots of countries of Latin America, consumers have already been using biometrics for many years to authenticate themselves; for social security, ID, driving license, accessing workspace and registering work time. Educating consumers around the role biometrics has to play for secure and convenient payments experience, highlighting their data stays within their control, will bring reassurance and confidence. And when more consumers experience the same convenience of contactless paired with advanced security level, demand and adoption follows.
Supporting new trend in banking and payments
The launch of biometric payment cards in Mexico with BBVA reflects the region's ambitions to carry on its progress towards smarter payments and embrace cashless opportunities.
Biometric cards present significant opportunities for consumers, banks and merchants, enabling generation x of convenient, secure and hygienic in-store purchases. As the region aspires to maintain momentum, biometric payment cards can be a powerful asset within the decision maker's toolbox, and it would be no surprise that BBVA Mexico may be the first inside a large list of Latin American banks offering this stunning innovation to their customers.