The digital ecosystem in Latin America

According to a report by GSMA, it is expected that by 2025, 75% of Latin America’s population will subscribe to mobile services, closing the gap with the average for developed markets, which stands at 87%. 1 Improving mobile penetration presents a sizeable opportunity for this region, especially in parts that have lagged behind in infrastructure development and access to information and services. A spectrum of opportunities will surface for participants in this growing digital ecosystem, including for application (app) creators and providers, online marketplaces, telecom carriers, digital media companies, retailers, and payment service providers.

Latin America (including the Caribbean) had 442m unique mobile subscribers by mid-2018, accounting for two-thirds of the continent’s population. 2 This number is expected to continue growing strongly in the years to come, albeit at different rates across different markets, and the region is forecast to contribute 10% of all new subscribers globally between now and 2025. The significant increase in the number of subscribers will be largely driven by major markets such as Brazil, Mexico and Colombia, which have penetration levels close to the regional average.

Separately, the continent’s e-commerce market is forecast to reach US$94bn in 2022, increasing substantially from US$61bn in 2018, witnessing more rapid growth than in any other part of the world. 3 In fact, Argentina and Colombia are among the fastest growing e-commerce markets globally. Across the region, credit cards are the most common payment mode for online purchases, but only for now, as the popularity of e-wallets is on the rise, increasing particularly sharply in Argentina and Brazil. The proliferation of mobile and internet usage has allowed for various ecosystems such as e-commerce, digital payments, online gaming and other digital media consumption to flourish. The number of mobile internet subscribers in the region reached 323m at the end of 2017, an increase of 47m from 2015. And by 2025, another 130m people are expected to come online, the majority of them connecting via high-speed mobile broadband networks.4

Increasing smartphone usage coupled with access to mobile broadband has ensured the viability and availability of alternative payment methods such as mobile wallets. There has been a prominent increase in the usage of innovative payment options across the region. The result has been significant ease of use for individuals to not only make traditional purchases online, but also to consume varied digital content, ranging from digital media services to products such as music and videos, or applications (apps) through app stores.

Better connectivity and new services are enabling healthier, more inclusive communities, and mobile money remains a central part of this story. Over the last two decades, a platform approach, especially in the payments ecosystem, has driven the growth of the digital economy. Processing over a billion dollars a day and generating direct revenues of over $2.4bn annually, mobile money has transformed the payment landscape in many emerging markets, including those in Latin America. With over 34 deployments and 21.5m registered accounts in 2017 alone,5 mobile money in Latin America has been instrumental in the growth of the digital economy.

1 GSMA Intelligence. The Mobile Economy: Latin America and the Caribbean 2018 Report

2 GSMA Intelligence. The Mobile Economy: Latin America and the Caribbean 2018 Report

3 Worldpay. Global Payments Report 2018

4 GSMA Intelligence. The Mobile Economy: Latin America and the Caribbean 2018 Report

5 GSMA Mobile Money Report 2017

To further accelerate this progress, the entry of new players on both the demand and the supply side of the payments-as-a-platform approach will be essential. The network effects realised with more inclusive access, coupled with the proliferation of new technologies such as 5G and Artificial Intelligence, will enable people across Latin America to truly be able to participate actively in the shaping of a better tomorrow.

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