Payments Landscape in Chile: Opportunities and Risks to 2021
Cash remains the preferred method of consumer payments in Chile, accounting for 73% of the total payment transaction volume in 2017. However, payment card transactions are gradually replacing cash transactions in Chile, mainly on account of government and bank initiatives such as a financial inclusion program and infrastructure modernization.
Banks are offering low-cost banking accounts to bring more of the population under the purview of the formal banking system. BancoEstado, for instance, issues the low-cost CuentaRUT savings account to those who do not qualify for conventional current accounts. The bank issues a debit card with the account, which can be used at ATM and POS terminals, although cheque books are not issued. The scheme is offered to legal resident females aged 12 and above and legal resident males aged 14 and above, with the aim of capturing the country’s unbanked population. According to BancoEstado, there were 9.7 million CuentaRUT accounts as of September 2017.
Furthermore, government efforts to provide basic banking and financial services have helped a large proportion of the population to become banked: the percentage of individuals aged over 15 with an account grew from 56.7% in 2013 to 77.6% in 2017.
Demand for credit cards increased during the review period, mainly because of increased short-term credit demand among the lower- and middle-class populations. Banks responded by lowering interest rates for credit card consumer loans; according to the central bank, the average interest rate fell from 34.3% in January 2013 to 21.9% in December 2017.
E-commerce transaction value grew at a strong CAGR of 22.0% during the review-period, supported by a rise in the number of internet and smartphone users coupled with a growing preference of online shopping. E-commerce transactions are high in Chile during festive seasons. Cyber Day in May, for instance, marks the most important day for e-commerce transactions, with online merchants including travel and tourism, electronic, and clothing/apparel retailers recording high demand. Growth in the e-commerce market is also supported by the availability of various alternative payment solutions such as PayPal, Servipag, Masterpass, and Visa Checkout.
The report Payments Landscape in Chile: Opportunities and Risks to 2021, provide top-level market analysis, information and insights into the Chilean cards and payments industry, including -
Companies mentioned in this report:
- Current and forecast values for each market in the Chilean cards and payments industry, including debit and credit cards.
- Detailed insights into payment instruments including cash, cheques, credit transfers, direct debit, and payment cards. It also, includes an overview of the country's key alternative payment instruments.
- E-commerce market analysis.
- Analysis of various market drivers and regulations governing Chilean cards and payments industry.
- Detailed analysis of strategies adopted by banks and other institutions to market debit and credit cards.
BancoEstado, Banco de Chile, Santander Chile, Banco de Crédito e Inversiones, BancoFalabella, CAT Administradora de tarjetas, BancoItaú Chile, Redcompra, Visa, Mastercard, Ripley, American Express, Diners Club, MagnaScope
Reasons to buy
- More convenient and faster banking services are emerging as an important driver of the payment card market in Chile. With the aim of offering banking accessibility and a unique consumer experience, in 2016 Santander Chile introduced work/café branches with an integrated banking space, a cafeteria, an open co-working space for meetings, and free Wi-Fi. The branches offer the normal range of banking products and services as well as customer assistance from bank executives. Likewise, BancoEstado provides Caja Vecina banking terminals which offer all the usual banking products and enable individuals living in remote areas to conduct various banking and payment transactions.
- To improve financial literacy among Chilean individuals, in October 2017 the government-funded Solidarity and Social Investment Fund launched a financial education gaming app called ‘You Decide’ in collaboration with BancoEstado. Players are provided with a virtual budget which they need to manage in the best possible way to meet their assigned financial goal, thereby helping them better understand the concept of finances and savings. Similarly, in the same month the National Consumer Service launched an educational campaign called ‘Step by Step, better decision’ that focused on imparting financial literacy to elderly Chilean citizens. The program consists of carrying out workshops and talks on financial education.
- As merchants recognize the benefits of switching from traditional POS terminals to ones with more features and mobility, uptake of mobile point-of-sale (mPOS) terminals is increasing. In November 2017, BancoEstado partnered with SumUp to offer mobile card acceptance to small businesses, collectively intending to serve 600,000 SMEs and 1.2 million sole proprietors. In May 2016 Transbank launched an mPOS solution that enables small businesses and service providers to accept card payments in Chile. The solution involves the conversion of smartphones into POS devices with the help of a wireless pinpad card reader that is connected to the smartphone via Bluetooth.
- Make strategic business decisions, using top-level historic and forecast market data, related to the Chilean cards and payments industry and each market within it.
- Understand the key market trends and growth opportunities in the Chilean cards and payments industry.
- Assess the competitive dynamics in the Chilean cards and payments industry.
- Gain insights into marketing strategies used for various card types in Chile.
- Gain insights into key regulations governing the Chilean cards and payments industry.
- Market Overview
- Executive Summary
- Card-based Payments
- E-commerce Payments
- Alternative Payments
- Payments Infrastructure & Regulation