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Study: Consumers now ‘cautious’ with personal finances, more digital than ever

A survey conducted by Mastercard and Americas Market Intelligence (AMI) in 13 countries across the Latin America and Caribbean region recently showed how consumer habits have changed, how the demand for financial services has increased, and how companies will have to adapt to the novel digital ecosystem generated by the pandemic.

The results of the survey were presented during the 9th Edition of the 2020 Mastercard LAC Innovation Forum held Nov. 18-19, an annual Mastercard event that brings together leaders and experts from the technology and payment industries to share their views and focus on how to lay the groundwork for the future in the post-COVID-19 era.

The survey shows how the pandemic and the social distancing it has entailed have stimulated digital and financial inclusion in Latin America and the Caribbean and, from one moment to the next, made this inclusion a priority.

The data revealed that more than 40 million people in the region have been banked in recent months and, by the end of the year, AMI predicts that 50 million users will have made online purchases for the first time.

COVID-19 forced Latin Americans from Argentina, Brazil, Chile, Costa Rica, Colombia, the Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Peru, Puerto Rico and Jamaica to reconsider their relationship with banks and technology. Forty-six percent of those surveyed have thought about saving money, and another 46% already pay bills online, so the seeds for a long-term savings mindset have already been sown, the study revealed.

“This is a defining moment for Latin America in terms of adopting technology; secure and seamless payment options have now become a priority,” said Walter Pimenta, senior vice president of Digital Solutions, Mastercard for Latin America and the Caribbean. “Mastercard is a strategic ally in payment digitalization and in the transition toward contactless payments, and we are proud to be playing a part in it all by offering high-end services that can be adapted to new consumer realities.”

The rise of e-commerce in the midst of the pandemic
The survey report shows that, over the past months, once cash was seen as something “dirty” and dangerous in terms of contagion, e-commerce became the only way to buy and online banks offered the simplest way to handling money. The survey also found that confinement nearly doubled e-commerce during this time period: from a pre-COVID-19 penetration of 45% to its current 83%.

As the consumer data shows, electronic business transactions have been the only means of acquiring physical goods and engaging socially and entertainment wise during the COVID-19 pandemic:

  • Up to 59% of those surveyed stated that their e-commerce expenses have increased during the pandemic, and 17% of them made online purchases for the first time;
  • Online purchases increased considerably in comparison to their former rates, with Chile (57%), Puerto Rico (48%), Peru and Argentina (44%), Colombia and Mexico (42%) and Brazil (41%) showing the highest online shopping increases during the pandemic; and,
  • First-time online purchases increased in markets like Panama (16%), Guatemala (13%), Ecuador (12%), Peru and Jamaica (10%).

Consumers also showed a strong desire to cut expenses, avoid accruing debt, manage their finances conservatively and acquire a long-term financial outlook.

  • For 46% of those surveyed, the main focus will be on saving money;
  • The pandemic has 44% of the survey’s participants thinking more about their future plans than they did before it started; and,
  • Savings and finances are more meaningful now than they were before the pandemic for 40% of consumers.

Decrease in cash payment
Moreover, each market saw a considerable reduction in cash due to the increase in e-commerce activity, the use of alternate forms of payment such as credit or debit cards and contactless payments, and social distancing.

The study reveals that:

  • Because of COVID-19, 62% of consumers used less cash, and 40% of them describe a reduction of at least 20%; and,
  • The countries that received the greatest impact were Chile (67%), Jamaica (71%), Peru (68%), Puerto Rico (65%) and Costa Rica (64%).

The impact on different payment methods was as follows:

  • Of the 45% surveyed who reported owning a credit card, 41% said that they have used that card more often, while 33% resorted to cash;
  • Debit card purchases were preferred by 21% of those surveyed; and,
  • Credit cards were the preferred method of payment for purchases in brick-and-mortar stores in Chile (60%), Costa Rica and Peru (57%), Panama (52%), Guatemala (47%) and the Dominican Republic (43%).

New spending habits have contributed to the rise of contactless technology. Consumers revealed their concerns about understanding the benefits of tech, adapting to it and having to rely on it as follows:

  • Some 40% of consumers own a contactless debit card;
  • About 29% of them own a contactless credit card; and,
  • About 12% reported applying for a contactless card for the first time.

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This story was written by our staff based on a press release.

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