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Payments Landscape in Chile: Opportunities and Risks to 2022

Payments Landscape in Chile: Opportunities and Risks to 2022

Summary

Cash remains the preferred method of consumer payments in Chile, accounting for 69.9% of the total payment transaction volume in 2018. 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. 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 63.3% in 2014 to 77.4% in 2018.

Additionally, the frequency of payment card use in Chile stood at 53.2 in 2018 - the highest among its regional peers Brazil, Argentina, Mexico, Colombia and Peru. Changing lifestyles and rises in the economically active population, disposable income and the popularity of online shopping supported the growth of payment cards during the review period (2014-18e) - a trend that is anticipated to continue over the forecast period up to 2022.

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. These accounts are offered to legal resident females aged 12 and above and legal resident males aged 14 and above, who have a valid identity card.

While credit cards penetration stood at 0.7 cards per inhabitant, the demand for credit cards has been gradually rising, mainly due to increased short-term credit demand among the lower- and middle-class populations. To push credit card adoption, Chilean banks are offering credit cards as part of bundled products. Banks are offering pricing benefits in the form of interest-free installment payments, reward programs and discounts to drive credit card usage.

The e-commerce transaction value in Chile grew from CLP1.3tn ($1.8bn) in 2014 to CLP3.1tn ($4.5bn) in 2018, at a strong review-period CAGR of 25.8%, supported by rising internet and smartphone penetration; annual e-commerce events are also contributing to this growth. The Santiago Chamber of Commerce organizes the Cyber Monday shopping event in Chile for three days every year.

The report Payments Landscape in Chile: Opportunities and Risks to 2022, provides top-level market analysis, information and insights into the Chilean cards and payments industry, including-

  • 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 debits, and 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
Companies mentioned: BancoEstado, Banco de Chile, Santander, Banco de Crédito e Inversiones, Banco Falabella, CAT Administradora de tarjetas, Itau Unibanco, BBVA, Scotiabank, Banco Security, Banco BICE, Banco CorpBanca, Redcompra, Visa, Mastercard, Ripley, American Express, Diners Club, Magna

Scope
  • To provide access to banking and payment services to a larger customer base, banks are expanding their services by launching new branches in remote locations. In 2017, for instance, BancoEstado opened 17 new branches in remote locations, making its service available to 200,000 individuals who do not have a bank presence in their locality. The bank also offers its services via a branchless banking service called CajaVecina, allowing users to conduct transactions on POS terminals installed across small and independent merchant outlets. CajaVecina terminals offer a range of banking products, and enable individuals living in remote areas to conduct various banking and payment transactions. As of September 2018, over 24,000 CajaVecina terminals were operating in Chile.
  • To offer convenient banking services, banks are focusing on digitalization, allowing customers to access banking services on the go. Banco de Crédito e Inversiones was among the first to launch an online account opening process in 2016; over 4,300 customers opened a Bci bank account online in 2017. Similarly, Santander launched digital onboarding for non-bank customers in October 2017. In 2016, the bank also launched a home banking service, which now registers over 240,000 monthly visits. This service enables customers to access all the benefits offered by the bank.
  • With an increase of payment card use in Chile, payment service providers are launching mPOS devices targeted at SMEs. In October 2017, BancoEstado, in partnership with SumUp, launched acquiring services in Chile under the brand name Compraquí. The bank offers free mPOS devices to SMEs at zero monthly fee and no maintenance cost. By the end of 2017, 1,847 mPOS terminals had been sold, which registered 44,000 transactions worth $735m. The bank aims to acquire 150,000 merchants within the next few years. In May 2016, Transbank also 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, which is connected to the smartphone via Bluetooth.
Reasons to buy
  • 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
Payment Innovations
Payments Infrastructure & Regulation
Appendix

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