We’ve been using plastic cards with magnetic stripe or a chip for a long time. Although they’ve worked magnificently well as a simple and secure payment mechanism, the truth is, the world around us is changing. Technology, demographics and shifting consumer behavior have opened the door to a transformative period in digital payments.
This transformation is manifesting itself in two ways: in the form factor we use as well as how we pay. Although many will say that digital payment adoption has been slow and that some regions are progressing faster than others, the truth is digital payments is already becoming a reality.
We are already seeing a much more connected consumer in Latin America. They are connected at home and on their mobile. The LAC market is the fourth-largest in the world1, with almost 326 million people using smartphones or other mobile devices. How they are using them is evolving, too, as 54 percent of Latin American smartphone users have made a mobile (or m-commerce) purchase via the Internet2; and about 22 million new users3 plan to be m-commerce shoppers soon. According to research conducted by Business Insider (BI) Intelligence the region is one of the fastest growing for e-commerce, just behind Asia-Pacific, with an expected compound annual growth rate (CAGR) of 17%.
What can the public sector do to facilitate digital payment adoption at a faster pace? As we discussed during the recent Emerge Americas 2016 technology conference in Miami, the key lies in those at the center of it all – the consumer. Consumers are starting to pay attention to new technologies and are demonstrating openness to different payment options, but in order to make digital payments a reality in the region, key stakeholders need to keep in mind a few key factors that might drive consumer behavior.
- Solve a real problem for consumers: this applies to almost anything and was key to the success of companies such as Uber and Spotify. For a business, an app, even for a payment method we must solve a consumer need to be successful. This consumer-centric approach allows us to use technology effectively to help them save time, offer a better shopping experience, or add a higher level of convenience. Consumers are unlikely to adopt a new technology if it does not solve a real problem for them.
- Provide a good user experience and top-notch security: Consumer expectations have risen. Companies must provide seamless, compelling and secure payment experiences to deliver against the demands of the connected world that we live in. A great example of this can be seen in the case of Qkr! in Chile during last year’s Copa America. Through this MasterCard app, consumers were able to order and pay for food at the soccer stadium without having to leave their seat, decreasing the amount of time they have to wait to place their order, or to pay the bill. This is just one example payments can make a brand experience better.
- Integrate loyalty programs: Consumers need motivation – and loyalty and rewards have proven to be immensely effective as a consumer incentive. Who doesn’t like that free coffee after a certain amount of purchases or that free gift after spending a certain amount? Adding a loyalty program could be a catalyst to drive adoption to things such as mobile payments.
- Create an emotional connection to the brand: Consumers are influenced by their emotions. Emotions shape the attitudes that drive decisions and behavior. To foster and build brand loyalty, how we intact with consumers in the digital space will be key. There are some brands that are already successful at making this connection with consumers and it’s one of the reasons that we continue to leverage our Priceless campaign – which has been around for nearly 18 years.
- 1 GSMA, The Mobile Economy Latin America 2014.
- 2 SAP, The Mobile Consumer: Insights on Latin America Trends Impacting Mobile Momentum and Customer Engagement, 2013.
- 3 MasterCard proprietary research data.