Just a few years ago, buying a coffee or paying for groceries in Latin America almost always meant reaching for cash. Fast forward to 2025, and the landscape has dramatically shifted: digital payments for in-person purchases have nearly tripled in market share, jumping from 11% in 2020 to 30% in 2024. This isn’t just a tech trend; it’s a transformation in how people live, work, and interact with the economy. From bustling urban centers to remote rural towns, smartphones and digital wallets are becoming more essential for making everyday purchases and financial transactions. The region is riding a wave of payments digitalization, and the momentum is undeniable.
As our recent study shows, however, the promise of digital payments still faces many challenges, like uneven access to technology, low financial literacy, and persistent trust issues. While more than 50% of consumers in virtually all countries of Latin America and the Caribbean prefer electronic payments over cash, and over 70% of firms make purchases digitally, barriers remain—especially for the elderly, rural populations, and small businesses. These groups often lack the infrastructure, knowledge, or confidence to fully participate in the digital economy.
Current Trends in Digital Payments
Our study traces out recent trends in the use of digital payments and offers policy recommendations to help improve their operation in the region. The research draws on post-pandemic data across Latin America and the Caribbean, with a detailed case study from Mexico. It explores how consumers and firms are transitioning from cash to digital payments and what’s holding some back. The findings are both encouraging and sobering. Ownership of payment apps and digital wallets has tripled, from 11% in 2021 to 36% in 2024. Smartphone-based payments have grown from 7% to 18% in the same period. Consumers cite convenience, time savings, and better financial control as top reasons for going digital. Firms benefit from faster transactions, safer handling of money, and automatic sales records.
Yet vulnerable groups—such as those with low incomes, low education, Indigenous status, or rural location—are significantly less likely to adopt digital payments. Among firms, small retailers and those without access to credit lag behind. In Mexico, only 23% of consumers reported using digital payments recently, and 37% still lack a bank account. The barriers include limited digital connectivity, high transaction fees, and lack of interoperability. Low awareness and digital literacy, habitual reliance on cash, and mistrust of financial institutions also hold back broader penetration.
Policies for Broader Access
To address these barriers, the study recommends a mix of public and private sector interventions. These include expanding broadband infrastructure, simplifying regulations to foster fintech innovation, and investing in digital and financial literacy programs. Such measures can help address the technological, economic, informational, and behavioral barriers that currently hinder broader adoption and use. Infrastructure investment can expand broadband access, particularly in underserved areas. Regulatory reform can simplify licensing and compliance for fintechs and encourage innovation in the process. Education and outreach can promote digital and financial literacy through interactive, embedded learning experiences.
Trust-building measures are important, like improving consumer protection, transparency, and dispute resolution mechanisms to enhance confidence in digital payments platforms. User-centered design, meanwhile, should customize digital payment tools to meet the needs of diverse user groups, including the elderly and rural populations.
The study also highlights the importance of network effects in digital payments. Adoption tends to accelerate when peers and merchants also go digital. Strategic interventions—like distributing debit cards to low-income households or incentivizing small businesses to accept digital payments—have been shown to trigger broader uptake.
The Promise of Digital Transformation
Digital payments are no longer a niche innovation. They’re a gateway to financial inclusion and a cornerstone of modern economic life in Latin America and the Caribbean. The region has made remarkable strides. Nonetheless, more needs to be done to improve quality, reliability, and inclusion. As the region’s economies continue to digitalize, ensuring that no one is left behind is a policy priority. By tackling the barriers head-on and implementing thoughtful, inclusive solutions, governments and financial providers can unlock new opportunities for millions. The stakes are high. A more inclusive digital payments ecosystem can boost consumer welfare, strengthen small businesses, and drive economic growth across Latin America and the Caribbean. The transformation is underway; it’s time to make sure it reaches everyone.
Leave a Reply