Latin America challenges Asia as Super App and digital payments innovation leader

Latin America challenges Asia as Super App and digital payments innovation leader
For an emerging market, Latin America is in many ways leading the global digital transformation of payments through endless innovation and new ways of partnering.
This was the upshot of a recent conversation between PYMNTS’ Karen Webster and PayU Latam CEO Francisco Leon, who said the platform has not let up on investment in innovation in both cross-border and local payment methods, and it’s paying off amid an economic slowdown.
“When I compare growth rates between what is happening with cross-border merchants versus local merchants, we are growing 14 times faster than local merchants,” he said. “It means that those services are creating value for consumers.”
Noting that Latam consumers are engaging more frequently with eCommerce, he said the job of payments platforms, financial institutions and technology providers is to improve velocity.
“This is part of the investment that we have been doing during the last few years. We were investing a lot in our technology, our availability and the capacity of the platform. One thing that is very important in online purchases is latency. We are trying to be the fastest provider.”
It also creates the digital infrastructure to support how Latam is becoming a massive payments laboratory, introducing real-time payments like Pix in Brazil and Colombia’s super app, Treinta. What’s important is a healthy mix reflecting how consumers prefer to pay.
“When we see the full picture where we have cross-border merchants but also local merchants, specifically in Colombia where we have a very high market share, you have to combine both traditional payment methods and the most available platform in terms of technology, combining that with the reality of each country,” he said.

Super Apps for Consumers and SMBs Proliferate

Second only to China in the development of super apps, Latin America is home to consumers with a high smartphone penetration, making for an ideal proving ground for super apps and new forms of instant payments, from P2P to the growing use cases around “person to merchant” (P2M).
“Based on what happened in China and what we were seeing with different big eCommerce [developments] around the world, I think this trend is coming to Latin America,” he said.
He pointed to PayU’s work in Colombia with the Treinta super app for small and medium-sized businesses (SMBs), saying, “This trend is going to grow and is going to have success in the region. They’re growing, they have more than 4 million small and medium businesses, and they’re creating that cooperation ecosystem with the different actors that can provide and add more value to the merchant.”
There’s also innovation and specialization happening around super apps in Latam, as Leon pointed to the success of the Rappi consumer super app, along with the rise of a new category of super apps designed for businesses to help connect to services, partners and more.
“If you have a super app for consumers and a super app for merchants, and they want to combine different services, this is going to be something easy,” he said. “If you have a good payment provider under you, you’re going to have the perfect match. This is part of what I see in the future.”
This is all part of the larger tech-forward momentum of the Latam region where heavy smartphone penetration and large populations of underbanked and cash-reliant consumers gravitate more readily to new types of digital services and payments to jump the gap.

Partner Power

Much of the vision for the forming digital connected economy in Latam is based on a higher level of cooperation and collaboration between different players in the ecosystem.
“From the PayU side, we always think that we need to see how to collaborate with different partners across the region, trying to bring expertise to our service and maybe to add value that way,” Leon said.
With investment capital scarce in 2023, he said it’s the right time to put away territorial and proprietary viewpoints and focus on collaboration, he said, “especially for big banks that usually try to get part of the payments ecosystem, they’re thinking now that maybe it’s better to partner with a payment provider that already has the expertise and the knowledge.”
It’s also a good environment for the various players to focus on what they do best and then bring in partners who can add to that, so a rising payments technology tide lifts all boats.
“PayU is good at payments,” he said. “This is our core business, and this is where we want to be the best platform in the world. And additionally, keep this innovative spirit to add value for our merchants. You also want to create added value [for consumers], and you can do it [by] collaborating with all the systems to give you a better time to market.”





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