Mobile Payments in Latin AmericaWhite paper by Fortumo

Introduction

Latin America has one of the world’s fastest growing smartphone markets in Brazil. Content consumption on mobile devices is also skyrocketing, illustrated by the growth of both mobile ad spend and internet usage. Traditionally carrier app stores and value added services such as ringtones and wallpapers have been very popular here and this usage is moving over to smartphone apps and services.

On the other hand there is a significant gap between smartphone ownership and payment card ownership - merchants are not able to generate revenue from a majority of the users browsing their content. This means mobile payments are an excellent fit to capture the growing revenue from the Latin American digital content ecosystem.

Fortumo’s Latin American white paper gives a high-level overview of the biggest markets in the region as well as insights on the carrier billing landscape, user spending behaviour, device preferences and localization. The data presented is from web payments (desktop & mobile), Fortumo’s cross-platform payment solution and in-app purchasing SDKs as well as external public sources of information.

Markets Overview

Smartphonepenetration

Credit card penetration

Brazil 34.4% 32%

Mexico 47.2% 17.8%

Population(millions)

204.5

121

Colombia 50.4% 13.7%

Argentina 41% 26.6%

48.2

43.1

Peru 37.1% 11.7%

Venezuela Unknown* 21.5%

31.2

30.6

Chile 55.5% 28.1%18.0

GDP per capita ($)

Digital gaming spend (2014)

Medianage

Country

16,096

17,881

13,430

22,582

11,817

17,695

22,971

$1,515 M

$990 M

$225 M

$675 M

$135 M

$225 M

$315 M

30.5

26.7

27.6

30.3

26.4

25.8

31.7

This white paper gives an overview of the mobile payments landscape in Latin America. It covers 7 of the biggest countries in the region by population: Brazil, Mexico, Colombia, Argentina, Peru, Venezuela and Chile.

Mobile Payments in Latin America

*Unknown (mobile phone penetration at 98%)

Brazil

Mexico

Colombia

Argentina

Peru

Venezuela

Chile

Vivo (30%), Claro (25%), TIM (27%), Oi (18%)

Telcel (80%), Movistar (7%), Iusacell (7%), Nextel (6%)

Claro (61%), Movistar (26%), Tigo (13%)

Movistar (31%), Claro (35%), Personal (32%), Nextel (2%)

Movistar (60%), Claro (35%)

Movistar (40%), Movilnet (30%), Digitel (30%)

Movistar (34%), Entel PCS (46%), Claro (20%)

One-off payments, recurring payments

One-off payments, recurring payments

One-off payments, assisted subscriptions

One-off payments, assisted subscriptions

One-off payments, assisted subscriptions

One-off payments, assisted subscriptions

One-off payments, assisted subscriptions

9.99 BRL (~$3.25)

50.44 MXN (~$3.25)

3,596 COP (~$1.5)

12 ARS (~$1.35)

4.96 PEN (~$1.57)

19.05 VEF (~$3)

900 CLP (~$1.46)

Country Carriers & Market Share

Carrier billing landscapein Latin America

Maximum transaction size

Spending limitsper month

Payment types available

339 BRL (~$110)

1,500 MXN (~$97)

50,000 COP (~$20.8)

300 ARS (~$33.7)

148.8 PEN (~$47.25)

1,905 VEF (~$300)

54,000 CLP (~$87.9)

User Spending Behaviour in Latin America

Spending behaviour in Latin America differs significantly between countries as well as platforms. In terms of transaction volumes for carrier billing, Brazil, Argentina and Mexico are the countries where the payment method has seen the biggest uplift. It’s also interesting to note that for most countries, user spending is bigger on the web (e.g. social networks, streaming services and games) than inside mobile games. This can be attributed to web services being cross-platform, giving users better access to payments - regardless of whether they’re on their home computer, using a smartphone on the city street or somewhere else.

Brazil is by far the most valuable market for digital content merchants - not only because of the biggest audience but also due to user “stickiness” - the average user in Brazil tends to spend more money and make more payments than in any other Latin American market.

Mobile Payments in Latin America

2.17

1.52

1.52

1.27

1.57

0.07

1.46

Brazil

Mexico

Colombia

Argentina

Peru

Venezuela

Chile

Monthly ARPPU (USD)Avg transaction (USD)

Web Payments(6 months average, October 2014 - March 2015)

11.4

4.3

3.07

2.91

1.96

0.33

3.45

2.09

1.46

1.52

1.06

1.41

0.07

1.46

Brazil

Mexico

Colombia

Argentina

Peru

Venezuela

Chile

Monthly ARPPU (USD)Avg transaction (USD)

In-App Payments (6 months average, October 2014 - March 2015)

3.34

2.86

3.48

1.69

0.25

3.46

4.19

Platform Preference in Latin America

The majority of payment traffic in Latin America originates from mobile devices: this means digital content merchants need to go mobile-first with their services in the region. Still, a sizeable amount of traffic is also coming from desktop users who should not be forgotten. Fortumo also sees a lot of end-users making payments with the same merchant across various platforms, e.g. a combination of payments from their computer, smartphones and smart TV.

Our recommendation to merchants is to try to provide a seamless payment flow across various devices: for example by having a user account with billing information linked to it. With carrier billing, this enables a 1-click experience from any device, even if the user is making their first payment on a device.

Desktop TabletMobileCountry

4.48%

5.24%

5.27%

3.23%

1.27%

2.27%

3.98%

61.04%

88.15%

58.66%

55.85%

80.25%

24.67%

59.52%

34.48%

6.61%

36.06%

40.92%

18.48%

73.06%

36.51%

Brazil

Mexico

Colombia

Argentina

Peru

Venezuela

Chile

Mobile Payments in Latin America

Source platform: web payments (6 months average - October 2014 to March 2015)

Language & Localization in Latin America

If the user does not understand English well enough to navigate their phone, they will most likely also not be able to understand your service. Keep in mind that the language used needs to be understandable even for those users who don’t speak the language. Using simple terms such as “Store” and “Buy” helps with this. It’s also a good idea to visualize the main functions related to purchasing (e.g. a shopping cart icon for your store).

Brazilian Portuguese and Spanish localizations are a critical prerequisite for entering the Latin American market. Data from the Fortumo payment products confirms the fact that most Latin American countries have a single-digit percentage of the population speaking English.

Unlike other emerging regions where local social networks are popular (e.g. vKontakte for Central & Eastern Europe and QZone for China), Facebook is the dominant network in Latin America, meaning that localization in terms of social plugins is not a necessity.

Mobile Payments in Latin America Map of South America with Countries by FreeVectorMaps.com

Brazil97% Brazilian Portuguese3% English

Mexico94% Spanish5% English1% other

Colombia97% Spanish3% English

Argentina92% Spanish7% English1% other

Peru99% Spanish1% other

Chile94% Spanish5% English1% other

Venezuela93% Spanish6% English1% other

https://fortumo.combd@fortumo.comhttp://facebook.com/fortumohttp://twitter.com/fortumo

Fortumo allows any merchant to set up payment processing for web and mobile services, games or apps. Users with a mobile phone are then able to make one-click payments using Fortumo without the need for a credit card: payments are charged to their mobile operator bill instead. Fortumo supports payments in 88 countries through 350 mobile operators. Founded in 2007, Fortumo has offices in Estonia, US, India, China and Singapore and is backed by Intel Capital and Greycroft Partners. Get started with mobile payments at https://fortumo.com.

About Fortumo