Embracing Contactless Payments: Latin America's Journey with Ruben Raul Diaz Silva

Ruben Raul Diaz Silva, an information and communication technology expert, recently engaged in a fascinating discussion with Kosta Du on the adoption of contactless payment in Latin America. With a wealth of experience spanning 25 years, including serving as the vice minister of telecommunications in Ecuador, Silva has been pivotal in developing fintech in the region. The conversation delved into the unique challenges and opportunities presented by the diverse ecosystem of Latin America, as well as the future of contactless payments.

Contactless Payment in Latin America: Current Landscape

In Latin America, contactless payments are a relatively uncommon occurrence. Most people still utilise magnetic cards for transactions. However, plans are underway to introduce 100 million neo-contactless cards next year. Silva attributes the limited adoption of contactless payments to a lack of external stimulus, as the technology is already available. COVID-19 has acted as a catalyst, prompting an expected increase in contactless payment adoption over the next one to two financial years.

Cyber Security and Contactless Payments

In contrast to other regions like Zimbabwe, South Africa, and the Republic of the Congo, Latin America has a robust cybersecurity infrastructure. This means that security concerns are less of a barrier to adopting contactless payments in the region. In addition, financial institutions in Latin America are consistently vigilant and have implemented systems to counteract potential fraud.

Challenges for Contactless Payments in Latin America

According to Silva, the primary challenges for contactless payments in Latin America are the proportion of bank users and the lack of experience among local technology developers. Approximately 70% of the population does not have a formal bank account, a prerequisite for contactless payment. Additionally, many small businesses cannot afford the costly systems required to facilitate card payments. However, contactless payments can be enabled with a $100 smartphone and a Visa Mastercard, making it a more accessible alternative. Regional banks could also implement POS systems for contactless payments if they show interest.

Fintech Opportunities in Latin America

Collaboration between US-based start-ups and UK fintech companies could yield significant opportunities for both parties. The United States is an underserved market with vast resources, but banks serve a low percentage of the population. In Brazil, regulators do not permit launching a fully digital bank, necessitating some degree of physical presence. However, COVID-19 has accelerated the adoption of contactless payments, so the region has the geopotential.

Silva emphasises the importance of conducting political and cultural surveys when entering a new market. While Latin America may not be entirely open to contactless payments currently, the traditional means of payment could soon be replaced by this modern alternative as the region continues to develop rapidly.