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Beyond the Transaction: Every Transaction Has a Story
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Going Digital: A Business and Social Imperative in LAC

The world is going digital. And Latin America and the Caribbean (LAC) is one of the regions leading the revolution.

The LAC market for mobility1 is the fourth-largest in the world, with almost 326 million people using smartphones or other mobile devices. How they are using them is evolving, too, as 54 percent of LAC smartphone users have made mobile (or mcommerce) purchases via the Internet2; and about 22 million new users3 plan to be mcommerce shoppers soon.

Even those who have not yet dived into the digital waters are thinking about it. Seventy-four (74) percent of LAC adults are interested in using mobile services4, including banking and digital wallets. Plus, LAC consumers making “card-on-file” recurring payments is expected to grow from 23 percent today to 87 percent within a decade. The rapid adoption of instant gratification/instant payment services like Uber is fueling much of that growth5.

Merchants and financial institutions that embrace digital convergence across all touch points have an enormous opportunity to bolster business and stave off challenges from fast-moving, disruptive outliers – including thousands of financial technology start-ups that have popped up everywhere.

Those that don’t run the risk of becoming irrelevant and unable to compete in this dynamic, hyper-connected, global economy.

LAC: Beyond Cash and Plastic

Consumers want smart, easy-to-use mobile applications from all merchants; 77 percent expect technology to provide a more convenient shopping experience6. So investing in digital platforms to make transactions simpler can be quite a business for LAC enterprises.

Cardholders who regularly make multiple types of digital payments spend 10x more7 than those who do not. Clearly, catering to these more affluent shoppers can be a boon for LAC businesses.

But how? Technological advancements – from cloud computing to the Internet of Things (IoT) – make digital commerce more widespread and affordable. Every connected device – from cars to refrigerators — is a potential commerce device, and this proliferation of digital platforms is changing the way merchants sell and consumers shop.

In Peru,   mobile phone operator Movistar is providing 16 million customers with the country’s first electronic money service. An electronic money account links their telephone number to their Tu Dinero Movil (“Your Mobile Money”) card; then, via their mobile phone, they can transfer funds, make in-store purchases, and replenish balances –without a bank account.

Brazil, where ecommerce sales grew 20 percent in 2014, was the first LAC country to offer MasterPass™, an innovative one-click ecommerce payment technology. By safely storing personal details, shipping addresses and favorite cards, the service simplifies making purchases from any mobile device.

By connecting digital services to shopping trends, LAC businesses can even use digital convergence to enter into a courtship with a new base of prospective customers – those who had previously been financially excluded.

Breaking Down Barriers to Financial Inclusion

Commercial enterprises that adopt digital solutions are breaking down barriers to financial inclusion that have prevented many in LAC from participating in the global marketplace.

According to the World Bank8, about 210 million LAC adults do not have bank accounts. As a result, they are more at risk of robbery or being unable to replace lost currency. Plus, they often travel long distances or stand in line to pay bills, limiting productivity and income potential.

On a positive note, the number of unbanked has decreased substantially. Today, about 51 percent of LAC adults have a bank account, compared to just 39 percent four years ago9. Easier access to funds – like digital payments through a mobile phone or in-store terminal – hastens full involvement in the digital economy.

Numerous studies have shown that paying wages or government assistance digitally opens the door to financial inclusion. When governments, retailers and financial institutions broaden their digital service offerings, the impact is immediate – and substantial.

For instance, in Colombia10 three million individuals are now receiving social welfare benefits electronically, making it easier for them to save money and pay bills in a safe and efficient manner, thereby helping reduce poverty.

Other manifestations of digital convergence benefit the financially disenfranchised, particularly women. In LAC, 23 percent of women own small businesses11. But for many in rural areas, the ability to compete on equal footing is hampered by a lack of access to banking.

Those struggles are lessened in Mexico, where the bank BANSEFI uses electronic payments to disburse social benefits. Most recipients are women, so the program is giving many – for the first time – the opportunity to deposit funds, save money, and engage in other financial transactions.

Businesses that offer user-friendly and secure omni-channel digital commerce solutions are answering consumers’ calls for exceptional experiences.

In LAC and elsewhere, going digital is fast becoming table-stakes for staying competitive in our fast-moving, always-connected world.