B2B Cross-Border Payments in Latin America: Opportunities and Challenges

Latin America has climbed the ranks to become one of the leading emerging markets, promising strong potential as a regional business hub in the making. This change is driven by increased digitization, and a focus on fast infrastructure development, especially to modernize domestic and cross-border payments. According to Nium’s research, a rise in internet access, smartphone usage, mobile money accounts, and received remittances has led to $14T in payment transactions.

There is a shift in the landscape; while cash remains the most common means of payment, the adoption of digital payments, mobile money, and improved financial access is evident, a trend further supported by the rise in eCommerce. There are notably different levels of services being offered by financial institutions depending on the country; nevertheless, the growth trends overall are positive.

Expanding footprint for financial institutions in LATAM

Another strong indicator of LATAM’s payments transformation is the increase in lucrative investment, approximately $23B, just by fintech companies over the past few years. Regulators are working actively to support the innovation boom by updating relevant legislation, meanwhile setting the tone for proactive consumer protection.

With 25% of the home-grown fintech operations in the payments and fintech space, many international players are looking to expand their footprint in Latin America. Market entry currently has multiple doors to business opportunities falling into one of these three categories:

1. Direct organic expansion

Historically favored as an approach, financial institutions are establishing a local presence, and engaging in marketing and business development initiatives from the ground up to build a sustainable customer base.

2. Acquisition

Some companies are using acquisitions as their channel to enter LATAM. For example. Mastercard acquired Mexico’s Arcus in 2021 to simplify their cross-border and real-time payments in the country, and seamlessly plug into the increasingly digital economy.

3. Partnerships

A wider industry trend, financial institutions engage in partnerships to avoid becoming direct competitors. This strategy has been extending beyond fintechs and payment companies, as businesses are delegating their payments operations to third-party providers, usually unseen to the consumer.

While the road to completely upgraded B2B cross-border payments in Latin America still needs work, growing alternative payment methods, digital inclusion, financial literacy, and enhanced payment capabilities promise a bright future, especially for businesses.

However, it is important to keep in mind that targeting expansion in an emerging market experiencing an innovation disruption also brings along its challenges. The LATAM payments landscape remains nuanced; there are different regulations, payment types, and currencies to be managed and complied with, an area of research not many financial institutions or businesses have the resources to address.

Why choose Nium as your payments partner?

Capturing regional opportunities and resolving complexities, this is where choosing a knowledgeable payments partner such as Nium is the solution to fast-tracking your success in Latin America. Our modern payments infrastructure and modular API suite powers B2B cross-border payments for businesses worldwide to unlock international financial growth, scalability, and seamless compliance with local market regulations.

As a global leader in on-demand money movement, Nium provides banks, financial institutions, and payment providers with flexible global payments and card issuance solutions. With our expertise, we resolve the challenges and break down barriers to entry for businesses in Latin America.

From FX controls to manage volatility, building constant innovation into the payment infrastructure, and helping businesses tap into a payment network of 190+ countries without time-intensive or expense integrations, Nium offers the guidance for you to stay at the forefront of the future of B2B cross-border payments in LATAM countries.

To learn more about trends and opportunities in Latin America, download our new guide, “Navigating cross-border payments in Latin America”, or book a call with one of our payments experts.