Latin America (LATAM) is home to one of the fastest-growing mobile markets in the world. In 2018, there were 326 million mobile internet users in the region, and that figure is anticipated to increase to over 422 million users by 2025. Part of the reason for such exponential growth is that mobile is the main tool for internet access in Latin America, providing a portable way for people living in rural areas to get online. The social media boom and rise in messaging platforms in recent years have also spurred demand for optimized mobile services.
As mobile penetration continues in LATAM, it is facilitating innovative apps that promote opportunities for social mobility, financial control, access to overseas markets and societal development. And while a difference in maturity levels and local regulations dictates the mobile landscape for individual countries, there are visible trends throughout the region.
These trends are both reactions to LATAM’s unique mobile conditions and broader international influences, so can be telling of future mobile user expectations and behaviors. By recognizing and assimilating these trends, new mobile apps and services can disrupt the market in a more meaningful way.
Here are the current and upcoming trends of mobile growth across Latin America:
Digital wallets
Approximately 70% of Latin America’s population is unbanked or underbanked, meaning there is a huge opportunity to improve financial access. One emerging solution is digital wallets, which work via top-ups and don’t require a bank account with a physical company or branch to set up. Digital wallets, therefore, bypass the mistrust that many Latin Americans have around official banking institutions.
COVID-19 has certainly contributed to the heightened demand for mobile wallets in LATAM. As a predominantly cash-driven location, concerns about handling paper money have been confirmed as new studies reveal that the virus can survive on physical currency for 28 days. In turn, masses of citizens and consumers have begun looking for safer alternatives to cash. In Mexico, digital wallets are thought to occupy a 27.7% share of the business-to-consumer e-commerce payments market by 2021, while Argentina has also been showing high in-store use of digital wallets during the pandemic.
Over in Venezuela, AirTM’s digital wallet has been processing funds promised by interim President Guaidó to essential workers. The company has been instrumental in delivering the money to healthcare staff after the Maduro regime blocked the provider operating in the country. Beyond financial aid, digital wallets in Venezuela and other countries with high inflation rates mean locals don’t have to carry large amounts of bills and coins with them.
It’s important to note that Latin Americans were already starting to embrace digital wallets prior to COVID-19. In 2019, they were the third most common form of exchange in Brazil on e-commerce platforms, accounting for roughly 14% of all transactions. Likewise, PayPal, Mercado Pago, and Nequi all launched digital wallet offerings in LATAM before the pandemic struck. It’s safe to say that digital wallets were gaining ground as an alternative method of payment but that COVID-19 has catalyzed and normalized mass adoption, placing digital wallets as a long-term payment option.
QR codes
Quick response codes, more commonly known as QR codes, are becoming more popular as they complement other forms of acceptance that the majority of people are already familiar with. For less tech-savvy users, QR codes bridge the gap between the online and offline world, and encourage the migration from physical to digital processes.
According to a 2019 report, 13% of internet users in Latin America had used a QR code in the last month, compared to only 8% in North America. Mercado Pago — a digital payment platform for consumers and businesses in Latin America — registered three million transactions processed through QR codes in 2018. Meanwhile, in Argentina and Colombia, 40% of people use their mobile phones to scan QR codes in some capacity. Argentina’s Central Bank has even established standards for QR code payments, implementing legislation about how characters within the codes have to be organized. Such a document lays the groundwork for fellow Latin American countries to follow suit and implement robust QR strategies.
Notably, QR codes aren’t only being used for payment purposes. In 2018, Brazil’s largest dairy provider added QR codes to its milk, which, when scanned, displayed information about the products. More than 12,000 codes were generated every hour during the campaign. More recently, Colombia has developed the CoronApp, where users enter personal information and answer a set of questions about their health. If they are deemed safe to go out, the app provides a “mobility passport” in the form of a QR code, which is used to enter public spaces.
QR codes have also become commonplace in restaurants and bars as the hospitality sector reopens in the pandemic. To prevent contamination via menus and limit the exposure of staff to the general public, consumers can scan codes with their phones, browse the menu, and in some cases, place their orders virtually.
With QR codes spanning a range of functionalities, they are an efficient way for Latin American users to interact with their surroundings while still conducting digital actions — which is an important consideration during, and post, the pandemic. Moving forward, Claudia Cabrera from a digital transformation company, intive, states that mobile apps need to concentrate on the interoperability of the QR code; meaning a QR code that does not depend on a particular provider and allows users to take action with other mobile services.
On-demand delivery
Home delivery sales have quadrupled during the last five years. Smartphone penetration has shaped a user base that is accustomed to making online purchases and is therefore powering on-demand delivery services.
Leading the charge with more than 10 million active monthly users across nine countries in the region is Colombian unicorn Rappi. The app was originally directed toward millennial users. However, as mobile usage and literacy has increased, the company has been redesigning its UX to accommodate more user segments. Plus, unlike other delivery services, Rappi goes further than food: Rappi Favor is available for any goods collection, Rappi Pay is a virtual wallet for external services in the app, and Rappi Bets lets users gamble on sports and casinos.
Other soaring delivery apps include Cornershop from Chile, which has expanded to Colombia, Mexico, Peru and Brazil due to its multicurrency, multilanguage and multitime zone capabilities. Glovo is prominent in Peru and has had two million app downloads since being founded in 2015. Brazil’s iFood registered 390,000 deliveries per day in 2019. In fact, online food delivery in Brazil went up by 80% in 2018 and is anticipated to completely replace traditional food delivery by 2024.
5G connectivity and interoperability
Although complete 4G adoption is still underway in Latin America (predictions state that 67% of the region will have 4G access by 2025), some countries have started experimenting with 5G solutions. Considering that 80% of people live in urban areas, 5G-enabled cities can provide mobile users with significantly faster transactions, increased bandwidth, improved connectivity with other devices and even extended battery life.
In April of last year, Uruguay was the first nation to launch a 5G system via the state-run telecommunications company, ANTEL and Nokia. Elsewhere, telecommunications company Movistar is supporting a 5G trial in Colombia to help control the spread of COVID-19. A camera using the technology has been installed at the Secretary of Health building in Bogotá, helping measure the body temperature of more than 400 employees in real-time.
In the second quarter of 2020, Latin America witnessed 3,685 5G subscriptions. The official 5G rollout is expected to be deployed in Argentina, Brazil, Chile, Colombia and Mexico, but the date is yet to be confirmed. In the meantime, apps and digital services that plan and optimize flows for 5G will have an advantage in markets. Features like seamless interoperability with other devices, machine learning, cloud-hosted apps, software as a service and virtual reality streaming are core development areas to explore in preparation for widespread 5G.
Latin America’s mobile expansion has resulted in clear trends that are not only representative of now, but also allude to where it’s heading. While different countries have niche pockets in the mobile space, there are overarching themes that position LATAM as a market primed for region-wide mobile innovation.
Mobile companies that seize on the progress already taking place and learn from or integrate trends like digital wallets, QR codes, on-demand delivery and 5G will be poised for the biggest success in LATAM — and quite possibly, on a global stage.
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