Spotlight on Chile and what operators should consider when it comes to local player payments

With a population of 19.4 million, Chile is proving to be a growing market on many fronts, presenting an exciting opportunity for operators who may be looking to branch out into the country if they haven’t already.

Its buoyant economy experienced a gross domestic product (GDP) rise of 11.7% in 2021 and saw a significant boost in ecommerce, with first quarter 2021 online sales increasing by 196%. Smartphone adoption was 70% in 2020 and is forecast to be 81% in 2025, figures very close to those for Latin America as a whole.

Chile has the highest banked population in Latin America – 74% have a bank account, compared to 49% for the rest of Latin America. But while the number of banked citizens is high, cash remains important, digital wallet uptake is rising, and consumers have also significantly increased their use of bank transfers.

The current state of play for card payments in Chile

With widespread banking access, debit cards have historically been a favourite. This is a trend highlighted in our 2022 survey of 1,000 Chilean consumers, which also covered Brazil, Peru and respondents across North America and Europe. In Chile, a massive 82% said they’ve used a debit card in the past month when paying for online purchases. This is compared to 69% for Latin America as a whole, 54% for Europe, and 60% for North America. The only other country with such high debit card use is the UK, at 82% also.

And it would seem that use is growing: 65% say that they use debit cards more frequently than they did a year ago, a number which is significantly higher than the Latin America average of 51%.

Alternative payment methods on the rise

Of the alternative payment methods (APMs), digital wallets and bank transfers are being used more often now compared to a year ago. 24% say they’ve used a digital wallet in the past month when paying for online purchases. And 20% use the payment method more frequently – with a further 17% saying they use it about the same as they did a year ago.

For bank transfers, 41% of survey respondents said they used this payment method in the past month – making it the most popular APM and the third-most popular payment method only after debit cards and credit cards. Furthermore, 61% said they use bank transfers either more frequently or about the same amount compared to a year ago.

Chileans are still somewhat reliant on cash, however, with 63% agreeing that cash is the most reliable form of payment, and 71% saying they’d be worried if they could no longer access cash. They are also exploring eCash (online cash solutions), with 14% having used it in the past month for online purchases, and 34% having either used it more or about the same amount compared to a year ago.

Online banking, security and trust

While ecommerce and APMs are on the rise, however, operators shouldn’t rest on their laurels when it comes to prioritising the risk management and security features of their payment model, as Chilean consumers have ongoing concerns about the potential for fraud. The stance on security of online payments is largely in line with Latin America responses on the whole, which is that 64% don’t feel comfortable entering financial data online, and 75% are more worried about online payment fraud today compared to 12 months ago.

Looking to the future

Chile traditionally has a large banked population and the enduring popularity of debit cards has only increased over the pandemic, as our survey results show.

Consumers’ uptake of digital wallets and the significant increase in the use of bank transfers indicate a willingness among the population to explore new ways to pay, which no doubt extends across all of the online brands they interact with. This, coupled with the growth of ecommerce as well as the growing economy, make Chile an exciting market for operators.

Gustavo Ruiz Moya, CEO eCash, Latin America & global head of open banking at Paysafe. Formerly head of LATAM for SafetyPay, Gustavo was the CEO of SafetyPay from 2013 before taking over his new role as part of the Paysafe Group, bringing his extensive experience in Payments, Banking and Travel industries. Prior to SafetyPay Gustavo was VP and General Manager for American Express, Membership Travel in LATAM. He also successfully led American Express Bank in Mexico.