It is not an overstatement to say that a significant portion of Latin American consumers have historically preferred cash transactions. Yet, after COVID-19 and the impact it had on society, cryptocurrencies look more and more like a viable alternative to cash. As of 2021, 76% of Latin American and the Caribbean (LAC) consumers had a smartphone, while 69% owned a bank account.1 This shows how cryptocurrencies could become a popular legal tender, given the wider access to crypto trading apps. Moreover, an important percentage of consumers said to be interested in receiving remittances in crypto, across different LATAM markets: 33% in Peru, 19% in Argentina, 15% in Mexico and 8% in Brazil.1 Given the stagnation in the remittance industry, due to the “stubbornly high fees” it charges consumers, there is a considerable market opening for crypto. Among the factors that could sway consumers towards blockchain technology is the fact that some crypto products allow transactions to be made without any fees.

Furthermore, there are other points which could make the case for crypto more convincing. For instance, inflation and political uncertainty are very real threats to incomes and savings in LATAM. These could be mitigated by crypto, which can work around government currency controls and restrictions. In the case of Venezuela, cryptocurrencies are one of the few available channels for sending funds across the border. Likewise, Argentina has shown how consumers fight inflation by keeping their savings on crypto. In a different use case, El Salvador made Bitcoin a legal tender in an effort to incentivize economic growth and to provide a wider access to financial services to its population. It is worth noting that some cryptocurrencies, like Stablecoin, have reduced the risk associated with crypto by pegging their value to a reserve asset, like the US dollar. This would capture demand from consumers and enterprises alike in sturdier LATAM markets since it would allow consumers to protect their savings from instability by having USD-tracking assets.

Central banks in some parts of LATAM have also begun to show an interest in crypto, and this gives them the opportunity to address the underbanked population. For example, banks in Brazil and Mexico have started to look at the possibility of developing CBDCs while giving their current customers digital wallets. This is due to the unquestionable value and potential crypto offers, which opens the doors for traditional banks, FinTechs, and governments to adopt crypto-friendly technology.

One of the most compelling aspects of crypto payments from the merchant perspective is that it lowers the cost of acceptance compared to many other forms of payment. This will allow mainstream travel industry companies to offer faster and cheaper payment experiences to their customers. And, with partners such as BitPay, merchants are able to process cryptocurrency without handling the digital assets, without exposure to the volatility of cryptocurrency, and with reduced risk of fraud.

The bottom line is that the crypto market will disrupt and transform payments in LATAM. UATP continues to be at the center of this disruption, providing access to companies like BitPay making cryptocurrency payments available to travel merchants. Through these partnerships, UATP can further fulfill our Network Members’ goals, continually updating our systems as modern technologies emerge.

1The cryptocurrency revolution in Latin American payments (AMI)