2024-09-17 14:12:56
According to a study, Ecuador is the Latin American country with the highest preference for using cash in its transactions.
Although more and more Latin Americans prefer to use credit or debit cards and mobile wallets to make their transactions, cash remains the most commonly used means of payment in the region, reveals the report prepared by the American consultancy McKinsey and Company.
The study, entitled “The Rapid Evolution of Payment Methods in Latin America,” surveyed more than 150,000 people from ten countries. These are: Ecuador, Colombia, Guatemala, Dominican Republic, Panama, Peru, Uruguay, Costa Rica, Argentina and Chile.
This report reveals that 70% of respondents in those 10 countries said they used cash in the last 30 days, despite only 30% stating that it was their preferred payment method. With 49% of respondents, Ecuador is the country with the highest preference for using cash in their transactions.
Colombia follows with 43%; and Guatemala with 40%, according to the study published in May 2024. Meanwhile, the countries where there is less preference for the use of cash are Chile (13%), Argentina (25%) and Costa Rica (28%). In these countries, users are inclined to use other means of payment.
Among the main factors that explain the widespread use of physical banknotes and coins in the countries covered in the report are:
High rates of informal employment.
Small and medium-sized businesses only accept physical money as a payment method.
Preference for cards and mobile wallets is growing
Despite the figures on cash usage, other means of payment have seen significant growth, according to McKinsey and Company. In fact, debit and credit cards went from a preference of 23% in 2021 to 54% in 2023. In other words, consumer interest in using these plastics has almost doubled.
As a result, overall, the preference for cash use in the region decreased from 59% in 2021 to 30% in 2023. Respondents cited speed and simplicity as the main factors influencing increased card use.
Debit cards gain ground
The preferred means of payment in Latin America in 2023 was debit cards, which even surpassed the use of cash. Thus, debit cards went from having a preference of 16% in 2021 to a preference of 36% in 2023, this represents an increase of 20 percentage points in two years. Among the factors that increased the use of these cards are:
speed and ease of payment (50%), greater control over personal finances (41%), contactless payment (28%), habit (28%), discounts (17%) and fear of fraud through other means (8%). Credit cards are the third preferred means of payment, after debit cards and cash.
The preference for using credit cards rose from 7% in 2021 to 18% in 2023; that is, it increased by eleven percentage points. In this case, the main factors attributed to this increase are: the possibility of paying expenses in installments (50%), low interest rates (41%), higher credit limits (28%) and loyalty programs (28%).
By: PRIMICIAS