In recent years, Latin America has seen growth in digital wallets, with Brazil and Mexico topping the list. The market has accelerated further this year with the pandemic. In Argentina, for example, there is talk of a “boom” of virtual wallets, with usage growing 800%, according to the Argentine Fintech Chamber, largely propelled by movement restrictions in recent months. However, digital wallets could contribute much more to financial inclusion, according to an IFC specialist. “Before, wallets offered a differentiated process for opening an account – something that was not connected to the world of traditional banking, but rather 100% prepaid and with a different logic, like those seen in Africa or Southeast Asia,” says Jeffrey Bower, expert in payments and digital financial services. Yet virtual wallets in Latin America, with some exceptions, are rather “services that connect your bank account, in a way to facilitate payments,” says Bower. “What we are seeing is a new channel for accessing simplified accounts, using different applications.” Dependence on traditional banking is a factor that the “new” wallets – or virtual wallets 2.0, in Bower’s words – must correct. “If you have someone banked and they are using this wallet to facilitate their payments, that implies that there was a change in customer behavior, but you haven’t really added something to the ecosystem,” says Bower. “The easy part is to take an existing customer to another form of payment; the difficult part is finding ways to involve all the people of the country to participate in the digital payments ecosystem.”

https://iupana.com/2020/08/31/latams-virtual-wallets-face-financial-inclusion-challenge/?lang=en#widget/?lang=en&utm_source=iupana&utm_medium=Newsletter&utm_campaign=Aug31ENG