Descubre el futuro de las finanzas en América Latina y el Caribe

The future of finance in LatAm & the Caribbean

O futuro das finanças na América Latina e no Caribe



Retail payments in LatAm: Will tokenization and crypto take us into the future?

Dec 5, 2022

By Roberta Prescott

As LatAm consumers increasingly embrace new payments technologies, tools like tokenization and cryptocurrencies have strong growth opportunities, according to executives at Mastercards’s 2022 LAC Innovation Forum.


Ensuring that payments are both secure and simple has been one of the great balancing acts of the financial technology revolution globally. It was a topic that was front of mind at Mastercard’s LAC Innovation Forum in Miami on November 29 and 30, with industry leaders pointing to contactless payments and tokenization as critical technologies for the future of retail payments.  

Additionally, digital currencies that leverage blockchains, and Buy Now Pay Later models are two important areas of innovation, according to Mastercard.  

Latin American consumers are rapidly adopting new digital payments methods. Some 86% of Latin American consumers had used at least one emerging payment method over the past year, according to Mastercard data released in June. 

And while that demonstrates the increasingly interest in adopting new payments technologies on the part of consumers, others are in development.  

For example, Mastercard is betting on the growth of Click to Pay, which speeds up online purchases by associating users’ card details with a phone number or email address collected earlier in the checkout flow.  

After a recent launch in Mexico, Click to Pay will be launched in Brazil, Argentina, Chile and Colombia in 2023, and it’s expected to be deployed along the entire region in the following years, said Walter Pimenta, executive vice president for product and engineering at Mastercard LAC.  

Click to Pay fits a trend of tokenizing transactions – something that has enormous scope for growth. “Just to give you a sense of where we are today, 33% of our payment volume today in this region on ecommerce is already tokenized,” said Pimenta. 

Questioned about Pix, and how Brazil’s instant payment system could compete with more traditional methods, Pimenta said innovation is happening across the region and real time payments are growing all over the world. Pix is seen as a competitor, but the executive highlighted that at the end of the day, it’s about consumer choice. 

“Pix is clearly a competitor, but it also opens a whole set of opportunities for us. We have been investing in technology for years. We have been talking to the government in Brazil to collaborate with Pix to make it more secure, make it more robust, so it’s absolutely an avenue that we can explore. But when it comes to credit and debit we are not seeing any impact as of now,” he added.   


LatAm’s crypto love affair 

Executives at the Innovation Forum were also bullish on the future of digital currencies in Latin America.  

For Paxos, a financial technology company that delivers blockchain solutions to global financial institutions, Latin America is its biggest market. “Latin America has really adopted this in a way that we haven’t seen in other regions,” said Charles Cascarilla, CEO and cofounder of Paxos.  

Cryptocurrencies offer a capacity to store value, he said . And even with recent volatility, allowing people to have dollars and move them through different rails, with lower costs and less need for intermediaries and correspondent banks “is something that’s very powerful,” Cascarilla said  . 

Pimenta noted the adoption of crypto in markets with hyperinflation, such as Argentina and Venezuela, where consumers are seeking to invest in digital assets, particularly stable coins paired with US dollars. “You dollarize your economies and protect them from inflation. Crypto is also driving financial inclusion,” the Mastercard EVP said.  

But he highlighted that crypto faces a moment where it’s necessary to build or to rebuild trust to consumers, to the industry. “Blockchain is the most important technology that protects all the transactions,” he said. 


How to avoid an FTX in Latin America 

Indeed, building trust is a challenge in today’s digital world — and regulations play a key role toward that goal, especially as crypto’s relevance for payments grows. How to add security and trust, while without adding friction, has been a fundamental issue for payments. 

“You have to trust and the regulation provides that. When you look at the space today, it’s largely been unregulated,” Cascarilla said. 

In a landmark move for the region, Brazil passed a crypto law on November 29, which is expected to bring more players and trust to the market.  

 “As an industry, we have to build trust across the ecosystem, and regulation sits at the center of it,” said Pimenta. “So it’s a pleasure to hear that the regulation passed in Brazil. I think it helps us to prevent situations like the one that happened with FTX, for example. So, we need to have clear rules, we need to have clear roles and responsibilities for a deep dive in the digital industry. Therefore I think that regulation is a must have.” 


Mastercard sponsored iupana’s travel to the Latin America Innovation Forum.  

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