Nearshore Americas

How the Unbanked are Propelling LatAm’s Mobile Money and Payment Industry

Although penetration of mobile services in Latin America remains high, the proportion of the unbanked population is still significant compared to other regions in the world. Almost half of the Latin American population doesn’t have a bank account, while the mobile services penetration is over 100%.

Many people in Latin America receive cash incomes which leaves them outside of the financial system, including savings accounts and credit or debit cards.

Safety and convenience are challenges for the population that uses cash frequently and pays bills in person. A concern regarding carrying cash is the real and warranted fear of being robbed, which is common in the region. The provision of financial services to the population without bank accounts includes micro and peer-to-peer transactions.

With these things considered, a recent Frost & Sullivan analysis shows significant space for growth in terms of the number of registered and active mobile money and payment users in Latin America.

Breaking Down the Stats

By 2022, Latin America is likely to have approximately 180 million registered users with 91.8 million active users. In Brazil, Mexico, and Colombia, registered users are likely to reach 83.4 million, 39.6 million, and 17.8 million, respectively.

Brazil is likely to lead the mobile money and payment services market in Latin America, representing about 56.9% of the total registered users in 2022. About 35.6% of the Latin American population will have a mobile money wallet registered in 2022, while 18.1% will be active users.

In Latin America, there are currently 16 deployments for the unbanked population, and most partnerships between telcos and banks have recently launched. Brazil and Colombia have the majority of initiatives in the region.

Where the Profit Comes From

Currently, mobile money and payment services provide indirect revenues for their providers, such as loyalty, quality of offer, increased use of the account/card/wallet/phone, increased portfolio (deposits/investments), and reduced operating costs with lower customer service interaction.

New value-added services are emerging with the evolution of services, which will be key to the expansion of current mobile money and payment offers. In the short term, the market will have mainly bilateral agreements for level of service and tariffs, such as tariffs for the use of the mobile services, fixed tariffs per transaction, and variable tariffs per transaction.

An evolution of the market will be revenues of product sales such as insurance, credit, currency exchange, and investments. In the mid term, complete integration with data cross-referencing and offers will emerge in the market, including cross-selling based on location, cross-selling according to the moment, and push coupons and offers from other participants.

Telcos Primed for Success

For telcos, there are specific use cases where they can still play a role in mobile money and payment services and dominate the market: social support, physical goods and services, online goods and services, and churn reduction.

Telcos have to reach where banks cannot afford to build a presence such as within rural/remote areas, which coincide with telcos’ universal service obligations and provisions areas.

For physical goods and services the target population is young consumers who do not have credit cards and micropayment customers with direct carrier billing. Physical goods and services include mobile insurance, ticketing, stamps, parking, and transportation (taxi/bus/train).

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The biggest use case of direct carrier billing is online gaming. Others include TV voting, competitions, charitable donations, dating, and betting. App stores and in-app purchases of digital content include music, videos, and games, for example.

In general, targeting a telco’s own base with specific and clear use cases can reduce churn by up to 80% and reinforce customer loyalty. This is the main incentive for telcos to remain a part of mobile money and payments.


The Latin America mobile money and payment industry is entering a defining phase, and go-to-market strategies will be crucial. Awareness of mobile payments is increasing, along with the number of unbanked population who have tried it and the number of people who will continue to use it.

As such, I predict that market leaders will have penetrated the market enough to guarantee the success of the mobile payment ecosystem in the next five years in the region.

Carina Gonçalves

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