Consumer payments trends 2022: a spotlight on Peru

Why Peru has seen such high adoption of alternative payment methods (APMs) among consumers, and the opportunity this presents for businesses.

Gustavo Ruiz Moya, CEO of eCash for Latin America and Global Head of Open Banking, Paysafe

With a population of 33.8 million people, Peru is a largely cash-driven society with a relatively high unbanked population compared to some other regions in Latin America – 57% unbanked compared to Brazil’s 30% and Chile’s 26%. Smartphone adoption, now at 62%, is growing and expected to reach 70% by 2025.

Peru has a traditionally low rate of credit card adoption, and as a country it is advanced in terms of digital payments. As online shopping has risen – 28% in 2021 according to industry figures – alternative payment method (APM) uptake has accelerated, and consumers are aware of and comfortable with the different APMs available to them.

APMs have been around for some time. Peru has had peer-to-peer (P2P) payments in the form of Yape from Banco de Crédito del Perú (BCP), the largest bank in Peru, since 2016 – and subsequently opened up to unbanked individuals in 2020. Consumers are also used to to QR code services, which have been encouraged by the Peruvian Central Bank, and eCash and bank transfers are popular, with appetite for greater use, as reported in our survey of 1,000 consumers in Peru in April 2022.

An ongoing reliance on cash

Our Lost in Transaction data shows that many people in Peru still rely on cash: 66% of consumers think that cash is the most reliable form of payment, and 76% would be worried if they could no longer access cash. This trend is likely related to the levels of financial inclusion in the country and consumers’ access to financial products and services through traditional banks.

22% of people said they used eCash in the past month when paying for online purchases, almost double those that have used a mobile wallet (12%). Our survey – which also gathered responses from consumers across North America and Europe – shows that this number is double the eCash usage recorded among North American consumers (11%), and more than double compared to respondents in Europe (9%).

Further, 42% indicate that they use eCash more frequently or about the same amount as a year ago – and 67% say that if it were easy, they’d prefer to pay for online transactions in cash. Most notably, 67% reckon they’d make online transactions more often if they could easily pay in cash, which suggests merchants making eCash options more widely available would be welcomed by consumers and potentially drive greater uptake of eCommerce.

Peruvians are also increasingly using bank transfer as a payment method, thanks to its speed, security, and affordability. In our survey, 56% say they use bank transfers more frequently or about as much as they did a year ago. And, of the 67% of consumers who have changed their choice of payment method for online purchases due to the rising cost of living, 43% are using direct bank transfers more often for payments – second only to debit cards, which 54% are using more often. This could in part be related to avoiding transaction fees, as well as increased availability of bank transfer options from merchants.

An eye on security

However, the security of payments does play on people’s minds: 46% of consumers consider security the most important factor when choosing how to pay for an online purchase. And they don’t mind having to go through extra steps to ensure their transactions are secure – 76% feel anxious when they’re not asked to provide any security information, like a password, when making an online payment.

But there’s some hesitation around disclosing financial information: 43% prefer using payment methods that don’t require them to share their details online and 69% don’t feel comfortable entering their financial data online. A significant 82% feel more comfortable using a payment method that doesn’t require them to share their financial details with merchants when they shop online.

Peruvians’ stance when it comes to security is clearly reflected in their increasing use of eCash and bank transfers. These payment methods directly address consumers’ concerns around safety and don’t require sensitive financial information to be shared online or with third parties.

Market maturity with potential

As our Lost in Transaction survey results indicate, the market for APMs is relatively mature in Peru, even in comparison to the rest of Latin America. Consumers find digital payment methods attractive for several reasons, not least their security and accessibility. There’s also scope for growth as mobile adoption rises, and because of consumers’ appetite to use options such as eCash if it were more widely available.

In a nutshell, Peru presents interesting country dynamics with a significant opportunity for merchants that have the right local infrastructure and payment methods in place.