New Mastercard study reveals financial inclusion momentum in Latin America, highlights remaining gaps to close

• Report finds the number of cash-only consumers - those without a financial account - has decreased dramatically from 45% to 21%. 
• Financial inclusion is not evenly distributed; only 59% of low-income respondents and 40% of respondents living outside major cities indicated having an account. 

• National governments played an instrumental role in promoting financial inclusion during and after the pandemic. 

MIAMI – June 12, 2023 – Mastercard released a new report today, "The State of Financial Inclusion post COVID-19 in Latin America and the Caribbean: New Opportunities for the Payments Ecosystem," demonstrating the mainstream adoption of digital financial products and services across seven Latin American countries (Argentina, Brazil, Colombia, El Salvador, Guatemala, Mexico, Peru) and the challenges that remain among those still excluded from the financial system. Conducted in partnership with Americas Market Intelligence (AMI), the report highlights that while most Latin Americans gained access to basic financial products between 2020 and 2023, 21% are still excluded.  

“Today, financial inclusion is a priority that goes beyond access. To be truly successful, financial services need to be widely utilized. Helping people and communities scale the financial inclusion ladder – from access to usage and beyond – is a critical component on the journey to reach new levels of economic prosperity,” said Marcela Carrasco, senior vice president, Market Development, Financial Inclusion, Latin America and the Caribbean.  

What we learned three years since COVID

Most Latin Americans (79%) have access to basic financial products, but there is still a gap among these individuals to achieve more advanced forms of financial inclusion.  

• Access to credit: While 58% of Latin Americans own a credit card, only 3 out of 10 of them have access to other forms of credit (loans, insurance, or investment products).  
• Uneven distribution of financial inclusion: Only 59% of low-income respondents and 40% of respondents living outside major cities indicated having an account.  
• National governments opened doors to financial inclusion: 15% of respondents indicated accessing their first savings/deposit account upon the digitalization of public assistance.  
• Consumers continued to climb the financial inclusion ladder after COVID: They adopted products such as investments, insurance and Buy Now Pay Later solutions at faster rates.  

The state of digital finance and cash

While the use of cash for day-to-day expenses decreased in favor of digital payments methods, consumers are living in an era when cash is co-existing with digital payments methods. Before COVID, 25% of respondents indicated that they used cash for more than 75% of their monthly expenses, yet in 2023, this number fell to 15%.  

• The use of cash: across countries, we can see a reduction in consumer’s use of cash for more than half of their monthly expenses. Specifically, Argentina reported a 20% reduction, Brazil and Mexico had the most significant reductions (-17%) and in Peru and El Salvador, which are known for being in earlier stages of digitization, the reduction was less drastic with reduction of 8% and 5%, respectively. 
• The role of payment acceptance: Despite this encouraging decline, cash is still the most used daily payment method, reflecting the strong role small businesses and public transportation systems play in the acceptance of digital payments. 
• The digital pivot by small businesses: A majority small businesses surveyed (92%) reported accepting some kind of digital payment. By far, the leading payment method accepted is P2P or bank transfer (82%), followed by online marketplace (33%) and QR code (32%) in third place. Yet, these numbers also suggest large levels of informality and the use of personal accounts, as the platforms mentioned do not require that the business be formalized. 
• Ecosystem incentives: Dethroning cash requires a closer look by digital payment providers to build solutions that offer relevant incentives for payers, consumers, and merchants.  
• Mobile phones: With smartphone penetration reaching 80% across the region, they are now an integral part of the payment process with 88% of respondents indicating that they use their mobile phones to make transactions and open a new account (55%). 

Access to different forms of credit remains an essential component in financial inclusion. Similarly, respondents highlighted that access to financial education is equally important, reinforcing that financial inclusion is not just about offering products, but also about understanding unbanked populations and communicating benefits according to their needs. Despite the gaps that still exist in Latin America, consumers report that financial inclusion has had a positive impact on their lives. 

Five lessons for the ecosystem

Payment providers in Latin America need to focus on five key areas to attract more users and increase financial inclusion.  

• First, they must prioritize personalization by offering tailored solutions to specific delayed segments, using open finance and personal finance management tools to add value and relevance.  

• Secondly, they need to focus product development on credit, creating better products that offer easier access to personal loans and credit card, and empowering innovative credit scoring or creative collateral.  
• Providers also need to reconceptualize financial education, moving away from traditional courses and workshops, and providing invisible, gamified financial education that is tailored to each segment’s financial capability. 
• Payment providers must leverage convenience and create incentives, focusing on time savings, embracing an ecosystem approach that solves several problems at once, and simple investment products that offers liquidity, to name a few.  
• Lastly, ongoing collaboration among the private-public sector is essential for enhancing financial inclusion, and payments providers must prioritize collaboration subsidies, public transportation, and proactive financial policies for cash reduction.  

Because financial inclusion is multi-dimensional, correctly measuring inclusion rates requires a regularly modernized view that explores consumer access, usage, and value received, among other factors. This study examines these nuances further in surveys of more than 2,800 consumers, 25 interviews with financial service companies across the region, and analyses the shifts in consumer behavior since its first report in 2020.  

Through its ongoing collaboration among the public and private sector, Mastercard continues to play a central role in expanding digital access and ensuring affordability and quality for people and organizations. To read more about “The State of Financial Inclusion post COVID-19: New Opportunities for the Payments Ecosystem,” download the report here.  

Scope and methodology 

The markets of study included Argentina, Brazil, Colombia, El Salvador, Guatemala, Mexico, and Peru. Research took place between November 2022 and January 2023 and consisted of a review of data made available by governments and financial institutions, as well as in-depth interviews with 25 financial service providers and online surveys of 2,815 individuals within these seven markets. 

AMI conducted national online surveys with consumers from the general population who were 18+ years old. The surveys had equal numbers of each gender (male and female) and had quotas on representative distribution across all income groups and according to capital cities (60%) and rural cities (40%). These seven economies represent more than 74% of total GDP in the region and more than 75% of its population.