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Co v er St o r y

Next-gen commerce, banking ing middle class and healthy consumer spending. "There
is a lot of untapped potential here and an opportunity to
Howard has seen digital commerce replace cash with sup- serve a massive customer base," he said. "Brazil is one of
port of regulators and private/public sector partnerships the largest countries in the world; when you add in the
aimed at promoting responsible innovation. "In many whole region it makes for a massive opportunity."
ways, Latin America is undergoing digital transformation
at a more rapid pace than some more mature markets," he Passarelli pointed out that Latin Americans are purchas-
said. "There is a very high adoption of digital payments; ing more types of products, a trend he attributed to the
cash is rarely used." pandemic, when demand increased for exercise, health-
care, food and groceries, home office facilities, and much
Indeed, Paysafe researchers found Latin American neo- more. While this trend is not specifically Latin American,
banks are thriving. "The likes of Nubank in Brazil, Ligo he mentioned other geographic factors shaping ecom-
in Peru, and Mach in Chile have successfully positioned merce growth. Shopping holidays, for example, are popu-
themselves as viable alternatives to traditional banking lar in the region, such as Brazil's Lover's Day, Mexico's El
for vast swathes of customers," they wrote, questioning Buen Fin and Hot Sale, Peru's Cyber Monday, and Chile's
why consumers prefer neobanks to traditional financial CyberDay.
institutions.
Meeting, defeating challenges
Gustavo Ruiz Moya, senior vice president & CEO Latin
America & Global Head of Open Banking at Paysafe, sug- Passarelli went on to say Worldline has invested in Latin
gested Latin American consumers like neobanking's ac- America for many years to serve the company's growing
cessibility and customer-facing technology. He noted that network of international sellers. Worldline helps enter-
41 percent of Paysafe survey respondents said neobanks prises process cross-border transactions locally and settle
provide a better digital user experience. abroad, while dealing with market complexities, he stated.

"Also, customers enjoy neobanks' lower fees (41 percent "Given the complicated and fast-changing cross-border
globally) and advanced features that help them control trade policies and regulations in Latin America, histori-
their spending (40 percent globally)," he said. "The prefer- cally, payments have presented significant obstacles, but
ence for neobanks is particularly higher in Latin America, the tide is beginning to turn," he said. "The embracing of
with consumers agreeing that they prefer banking with digital payments since the pandemic is helping to trans-
neobanks in Peru (55 percent), Chile (45 percent) and Bra- form traditional methods of payment and overcome many
zil (63 percent)." of the barriers faced." Passarelli further noted the histori-
cally low levels of account ownership, in which nearly half
Gomes described Latin America as a hub of innovation for of the population does not hold bank accounts, have con-
open banking and finance, reflected in both government sistently hampered growth in the region. Even today, he
and private sector initiatives. "Brazil, Mexico, Colombia said, a large percentage of consumers remain unbanked or
and Chile already have a regulatory framework for Open underbanked in countries that rely on cash transactions.
Banking," he said. "The implementation of Open Finance
in Brazil has become a global benchmark. Colombia is also "Fraud is also prevalent in the region," Passarelli said. "To
on the right track, and the national government has high- be successful, a secure, trustworthy, smooth payment ex-
lighted the open data scheme as a priority for achieving perience is essential, with a range of payment options."
greater financial inclusion."
Howard noted Latin America's digital transformation has
Speed to market created new opportunities for fraudsters. "There is a need
for more global, unified cybersecurity solutions here," he
Passarelli saw digital solutions rolled out in weeks or even said. "Often, companies are using a hodgepodge of differ-
days, as opposed to years, as Latin ecommerce soared be- ent solutions to fight cybercrime, which can be ineffective."
tween 2019 and 2021, which was helped by decades of in-
vestment in telecommunications infrastructure and flex- Gomes agreed Latin America is among the regions that
ible government oversight during the pandemic. suffer the most from online attacks. Technology, he add-
ed, is becoming a determining factor in preventing attacks
"Specific ecommerce related trends that have emerged and managing cybersecurity risks. "Due to being a region
in Latin America in recent years include the rise in retail undergoing digital transformation, it is also more suscep-
and digital goods," he said. "Between 2019 and 2020, these tible to cyberattacks," he said. "The challenges range from
areas grew significantly with a large majority emanating creating cybersecurity laws to cooperation initiatives be-
from Brazil alone. Digital goods growth was driven main- tween governments and businesses."
ly by elements such as streaming, online gaming and on-
line education, which became important for the millions Mastering cultural preferences
of people doing both work and leisure at home."
Reflecting on Latin America's diversity of cultures, Pas-
From his vantage point at Caf's Sao Paolo headquarters, sarelli stated that each country has its own geographical
Howard has seen his company grow alongside a thriv- nuances regarding consumer behavior, ecommerce and
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