LatAm e-commerce projected to grow 19% annually

The e-commerce market in Latin America will grow at an average annual rate of 19% until 2025, according to a Worldpay report.

Between 2017 and 2021, average annual growth was 22%, according to Worldpay.

Argentina saw the largest increase at 70% in 2021 in local currency. For the next few years, the country is predicted to be in line with the global growth rate of around 26%, one of the highest in the region.

According to figures from Argentina's e-commerce chamber CACE, the market reached 1.5tn pesos (US$13.1bn) in 2021.

The Worldpay report projects an annual average increase of 18% for Brazil and 17% for Mexico. The rest of Latin America will also see double-digit growth, it said.

Figures from PayRetailers indicate that Latin America is home to some 300mn digital shoppers, which is expected to grow more than 20% by 2025.

DIGITAL PAYMENTS

The fintech industry is experiencing a boom in Latin America, with launches, new unicorns and investment inflows.

Even so, credit cards are the leading e-commerce payment method, accounting for 39.3% of transaction values in 2021, Worldpay says.

Brazil is the country with the most credit card transactions by value at 44.7%.

“Although the share of credit cards is projected to decline slightly, they will continue to be the principal means of payment in all countries of the region until 2025,” the report states.

The exception is Mexico. By 2024 digital wallets are projected to overtake credit cards in transaction value share.

In 2021, digital wallets accounted for 19.2% of e-commerce spending. They are expected to reach a quarter of transaction value by 2025, according to the report. In Mexico, wallets already account for 27% of e-commerce transaction value and will continue to grow to a 36% share by 2025, it added.

The report projects a gradual reduction in cash payments. E-commerce payments in cash on delivery represented 3.8% of regional spending in 2021, which is projected to drop by half by 2025.

Postpaid means such as Boleto Bancário and Rapipago picked up slightly in 2021 and represented 7.1% of the value of e-commerce transactions at a regional level, but the report projects a drop to 5.4% by 2025.

A reduction in bank transactions is also expected.

Buy now, pay later options will grow by 98% between 2021 and 2025 but will continue to represent a small part of the market at 2.2%, the report says.