The digitization of emerging economies is driving an acceleration of digital commerce in regions such as Latin America, according to a new study.
According to the Beyond Borders report by Brazilian fintech Ebanx with Payments and Commerce Market Intelligence (PCMI) data released today (25), the digital commerce markets of Latin America and Africa combined are expected to surpass US$1 trillion in total value by 2026. Of the emerging countries analyzed, however, India leads the way, with a digital economy expected to exceed $275 billion within the next three years.
The report projects that the Latin American digital economy will almost double by 2026, reaching $944 billion in value. Calculated at a compound annual growth rate (CAGR) of 23% based on data from PCMI. The expansion illustrates the trajectory of markets in the region, like Brazil, the largest Latin digital economy, followed by countries like Mexico, Colombia, and Peru, which see annual growth rates for digital commerce of around 30%.
The acceleration of digital markets in rising economies is explained by a young and growing population, contrasting developed regions, according to the president of global payments at Ebanx, Paula Bellizia. “In addition to the demographic and economic push, rising economies largely benefit from digitization,” she adds.
This digitization dynamic has created opportunities in verticals under the digital economy umbrella, ranging from gaming and digital ads to software-as-a-service and B2B online trade, Bellizia says, with digital payments being the “backbone” of that local evolution.
While credit and debit cards still represent 51% of digital commerce value in Brazil, the Ebanx report noted alternative methods are “revolutionizing both offline and online purchases”. In Latin America, the highlight cited in the study is Pix, Brazil’s instant payments system launched in 2019, which is currently used by 4 in every 5 adults daily, according to data from the country’s Central Bank.
In Brazil, a vast majority of adults prefer digital methods over physical payments, ranking the country as the fourth largest user of digital wallets globally, according to a separate report by Morning Consult. Nearly three out of four adults surveyed in July last year by the consulting firm reported not using physical means for payments in the previous month.
According to the Ebanx report, the Brazilian digital commerce market reached $275 billion in 2023 and growth is set to continue in line with the regional growth predictions.
On the other hand, when it comes to online consumption in Brazil, sales declined by 7.3% in the first half of 2023, according to data from NIQ Ebit. This was mainly due to consumers showing increased loyalty to specific stores and spending more per purchase.
However, a positive trend emerged in the second quarter, with the decline slowing to 5.7%, indicating a gradual market recovery. By June 2023, the downturn further had reduced to just 2.1%, suggesting improving conditions and the potential for a full recovery in the country’s e-commerce sector.
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