New Mastercard Study Reveals Financial Inclusion Momentum in Latin America, Highlights Remaining Gaps to Close
June 12 2023 - 9:00AM
Business Wire
- 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.
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: adopting 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.
About Mastercard (NYSE: MA)
Mastercard is a global technology company in the payments
industry. Our mission is to connect and power an inclusive, digital
economy that benefits everyone, everywhere by making transactions
safe, simple, smart and accessible. Using secure data and networks,
partnerships and passion, our innovations and solutions help
individuals, financial institutions, governments and businesses
realize their greatest potential. With connections across more than
210 countries and territories, we are building a sustainable world
that unlocks priceless possibilities for all.
www.mastercard.com
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230612005138/en/
Andrea Denadai, Mastercard Andrea.Denadai@mastercard.com
MasterCard (NYSE:MA)
Historical Stock Chart
From May 2024 to Jun 2024
MasterCard (NYSE:MA)
Historical Stock Chart
From Jun 2023 to Jun 2024