LATAM Payments: evolution of Payment methods in Latin America

The shift from Cash to Digital Payments

The shift from Cash to Digital Payments unique relationship with payments. For a very long, cash ruled the streets, deeply embedded in everyday transactions, from corner stores to large-scale businesses.

Not so long ago, even as credit and debit cards gained traction, a significant portion of the population remained unbanked, operating outside the traditional financial system.

But over the past decade, a remarkable change has been taking place. One that has redefined how people and businesses move money across the region.

This transformation has been driven by a combination of technological innovation, regulatory shifts, and a deep (but unknown) need for financial inclusion. Mobile phones and internet access have brought banking to millions who previously had no access, and over the last couple of years, Neobanks have taken this to the next level.

Governments have stepped in with policies aimed at reducing dependency on cash, such as limits and stricter AML regulations. Fintech companies have seized the opportunity to introduce solutions to the complexities of Latin American markets.

The rise of Real-Time Payments

One of the best examples of this shift is Brazil’s Pix system. Launched by the Central Bank in 2020, Pix changed the game overnight.

In 2024, it had a 53% YOY growth and is not showing signs of slowing down. It provided a real-time payment infrastructure that allowed people to transfer money instantly, at no cost, using only a phone number, email, or QR code. The adoption was incredible.

Within months, Pix had overtaken traditional bank transfers, and today, it processes billions of transactions monthly. It didn’t take long for other countries to take notice. In Mexico, CoDi followed suit, while Argentina’s Transferencias 3.0 aimed to replicate similar success.

The evolution of Installments and BNPL

But real-time payments were just the beginning. Installments have been around for a very long time in the region.

Over the last couple of years, a wave of Buy Now, Pay Later (BNPL) solutions emerged, modernizing the long-standing tradition of instalment payments. In countries with relatively low credit card penetration, BNPL has given consumers access to flexible financing without needing a traditional bank loan. Companies like KueskiPay in Mexico and Nelo have grown rapidly by tapping into this demand.

The growing role of Cryptocurrencies & Stablecoins

Meanwhile, another unexpected player has entered the scene: cryptocurrencies and stablecoins.

Latin America has long dealt with economic volatility, from hyperinflation in Argentina to currency controls in Venezuela. As a result, stablecoins like USDT and USDC have found an audience eager for an alternative to local currencies.

What started as a way for businesses to hedge against inflation has now become a viable payment method. More merchants are accepting crypto, cross-border transactions have become more fluid, and fintech platforms like Bitso and Ripio are making it easier than ever for users to integrate digital assets into their daily financial lives.

A point that is important to keep in mind is that there is still work left to do in the ’off-ramp’ part of the process - still, today, going from Crypto to FIAT can be challenging.

The rise of Super Apps & Embedded Finance

At the same time, super apps have started reshaping the way people interact with financial services. First, beginning in Asia years ago (WeChat being the best example), companies like Rappi and Nubank are not just providing digital wallets or bank accounts but building entire ecosystems.

A user can order food, apply for a loan, send money to a friend, and even invest in stocks, all within a single app. This level of integration reduces friction, making financial services more accessible and intuitive.

Challenges in the LATAM Payments Space

But despite this rapid evolution, challenges are still there.Regulatory uncertainty continues to be a significant hurdle for businesses operating across multiple markets. Compliance requirements differ from one country to another, making regional expansion complex and costly.

Fraud and security concerns have also risen alongside digital adoption, forcing payment providers to invest heavily in authentication and risk management solutions. And while mobile penetration has increased, infrastructure gaps in some areas still limit the widespread adoption of digital payments.

What’s next? Open Banking, CBDCs & Payment Orchestration

The next wave of transformation in LATAM payments will likely come from open banking initiatives and CBDCs (Central Bank Digital Currencies). As regulators push for greater financial interoperability, banks and fintechs will be forced to collaborate more closely, opening up new opportunities for innovation. Payment orchestration will also play a critical role, helping businesses optimize transaction approval rates, reduce fraud, and navigate the fragmented payment landscape.

At Vangwe, we have been at the forefront of these changes, helping businesses integrate with leading PSPs, orchestrators, and alternative payment methods across Latin America. We’ve seen firsthand how a well-executed payment strategy can drive higher conversion rates, reduce operational costs, and open new revenue streams. The companies that succeed in this space will be those that can anticipate shifts in consumer behavior and adapt quickly to new payment technologies.

The story of payments in Latin America is still being written, but one thing is clear: cash may still be around, but digital is the future. And the businesses that embrace this transformation now will thrive in the years to come.

Key takeaways: The future of payments in LATAM