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The bright forecast for forex development in Latin America
With huge populations and economic opportunities, the potential for retail forex trading in Latin America is vast. Here’s what you need to know.
The economies of Latin America are classed as emerging markets, and so there is huge potential for forex development in the region. But how can this potential be realised?
Our latest whitepaper, Retail forex development in Latin America, offers an overview of the market, as well as the opportunities and challenges that must be overcome to witness this bright future.
Here are some key takeaways from the report.
How people are paying in Latin America
Latin America is a diverse region, with our report focusing on 14 countries. So, it’s no surprise that the way people pay across Latin America is extremely varied.
For example, while the banked population is high in some countries (87% in Chile), this is far lower in others – as of 2021, only 36% of El Salvador’s population was banked.
However, regardless of how far along the countries are in their digital journeys, there is still a significant reliance on cash across the region. In Mexico, for example, 82% of people would still prefer to use cash over any other payment method.
With this in mind, forex development in the near future will be reliant upon consumers having access to payment methods that enable them to pay without a card. eCash, or online cash, is the perfect solution for this, allowing consumers to pay digitally, using cash, through either pre-paid or post-paid methods.
Providers such as PagoEfectivo and SafetyPay are already hugely popular in the region, allowing consumers to enjoy the benefits of eCommerce, while keeping control of their cash.
What is the future of payments in Latin America?
Latin America’s expanding economies and technology uptake mean the region could be poised for a forex boom.
There are signs, for example, that consumers are becoming increasingly comfortable with depositing their money to online platforms, with significant growth in mobile money accounts in Latin America. In Colombia in 2017, the percentage of people with mobile money accounts was 5% – in 2021, the percentage had risen to 22%.
This blossoming relationship with digital payments can drive growth in retail forex trading. But consumers’ payment choice must be catered to, going beyond credit and debit cards to embrace local payment methods (LPMs) like eCash and digital wallets.
Digital wallets are becoming increasingly popular in the region. In 2022, Pix made up 23% of all eCommerce transactions in Brazil, and 11% consisted of other digital wallets, such as Skrill and NETELLER. And this isn’t expected to slow – with 20% growth estimated by 2025. Seamless and secure – digital wallets don’t require the consumer to enter financial details – these are a key payment method in a growing market.
While there are challenges – including regulation and different economic outlooks – the growing prevalence of digital payments is a huge opportunity for retail forex brokers looking to expand into Latin America.
By ensuring that all payment methods are offered, online cash and digital wallets, and security and seamlessness is delivered in equal measure during the payment process, forex brokers can witness the region’s full potential, and thrive as a result.
To learn more about the forex opportunity in Latin America, download our report: Retail forex development in Latin America.
