The digital payments sector in Latin America is experiencing digital-first financial institutions increasingly dominating online card transactions.
Nowhere is this shift more pronounced than in Brazil, where 41% of online credit card transactions originate from digital issuers.
This trend reflects the growing influence of fintechs and neobanks in reshaping consumer payment behaviours and redefining the role of credit cards in a landscape increasingly driven by digital financial services.
The proliferation of digital banking across Latin America has significantly bolstered credit card transactions.
According to EBANX, fintech-driven digital issuers are responsible for a substantial portion of online credit card payments, not only in Brazil but also in Colombia (21%) and Argentina (19%).
This shift demonstrates how the integration of alternative payment solutions – such as e-wallets and real-time payment systems – has influenced the evolution of credit cards rather than replacing them.
“The rapid adoption of digital payment channels in emerging markets has reshaped consumer expectations and market dynamics,” says João Del Valle, CEO and Co-founder of EBANX.
“Innovations like Brazil’s Pix and Colombia’s PSE have accelerated advancements across all payment sectors, compelling both traditional and digital credit card issuers to innovate in response.”
Fintechs and neobanks have challenged the dominance of legacy banks by offering intuitive digital platforms, personalised rewards programs, and seamless onboarding experiences.
This impact is particularly evident in Brazil, where the number of digital financial service users surged from 25 million to 100 million within three years, according to the Central Bank of Brazil.
Among these users, nearly 40% hold credit cards – a segment that has tripled in size since 2019, largely due to the influence of digital-first financial players.
The Future of Credit Cards in E-Commerce
Despite the rise of alternative payment methods, credit cards remain central to digital commerce.
Market projections indicate that credit card usage for online transactions in emerging economies is expected to grow at an annual rate of 13% through 2027.
Recognising this trend, traditional financial institutions are investing heavily in technological innovations to enhance the online payment experience.
One major advancement is click-to-pay technology, which reduces checkout friction by streamlining the payment process.
Another significant development is network tokenization, which replaces sensitive card details with encrypted digital identifiers, thereby mitigating fraud risks while enhancing approval rates.
According to EBANX, tokenized transactions in Brazil led to an 86% decrease in fraud-related declines and an increase of up to 7 percentage points in approval rates for online retailers.
“In today’s rapidly evolving payments ecosystem, the focus isn’t on choosing between traditional and digital payment methods,” Del Valle explains.
“Instead, the goal is to create a payments environment where multiple solutions coexist, offering consumers greater flexibility and a seamless transactional experience.”
Debit Cards and Financial Inclusion
While credit cards continue to dominate online transactions, debit cards play a pivotal role in advancing financial inclusion.
In regions where credit accessibility remains limited, debit cards provide an essential gateway to e-commerce.
In Peru, 60% of first-time online shoppers use debit cards, while in Mexico, the figure stands at 55%.
However, the function of debit cards within the digital payments landscape is evolving.
In Brazil and Colombia – where alternative payment solutions are gaining traction – debit card usage for online purchases is in decline.
In Brazil, Pix now accounts for 40% of total online transaction volume, whereas debit cards represent only 1% of digital commerce payments.
A Payments Ecosystem in Transition
The transformation of Latin America’s digital payments landscape signals a fundamental shift in consumer behaviour.
While fintech-driven innovation has expanded financial access and accelerated credit card adoption, incumbent banks are responding with advanced technological solutions to maintain their relevance.
The coming years will likely witness greater integration between credit cards, real-time payment platforms and digital wallets, fostering a more inclusive and efficient financial ecosystem.
As Latin America’s digital economy continues to evolve, the priority will be to develop an adaptive and interconnected payments infrastructure – one that capitalises on the strengths of both emerging fintech innovations and established banking frameworks to meet the shifting demands of consumers.
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