56% of Peruvians cannot choose the payment method

Although digital transactions are positioned as the favorite option for many, in Peru there is still a reticent market that does not give consumers the freedom to choose the payment method of their preference at physical points of sale. In this sense, 56% have been forced to prioritize cash, according to the study by Minsait Payments on the digitalisation of payments. While in countries such as Spain, Italy and the United Kingdom the percentage is lower, ranging between 26% and 43%.

The main difficulty preventing the preferred method of payment is, firstly, the lack of acceptance of the scheme with which the customer wants to pay (29%), secondly, problems with the operation of the payment method to be used (22.5%) and, finally, the friction associated with costs or commissions for the merchant to accept the payment method (25%). These three barriers perceived by 76.5% of Peruvians are greater than in 2022, when it was 66.1%However, lack of digital access and banking literacy also play a role.

Financial exclusion

At an institutional level, the use of cash is still considered essential, as it remains essential for many businesses and households that are in a situation of financial or even digital exclusion.

Carlos Huamán, executive director of DN Consultores, points out that the restriction is not on the side of the digital application per se, since -to date- More than 30% of adults already have online payment applicationsIt would rather be a question of banking.

“Banking is an issue that affects the financial sector. It happens that there are people who prefer to work with cash. I am referring to those who live in rural areas or in the peri-urban area, far from the country’s economic hubs,” he explains.

Link of informality

According to Javier Ichazo, head of Credicorp’s microfinance business line, less financial inclusion results in greater informal employment.

In Peru, Only 17% of informal workers are at an advanced level of financial inclusioncompared to 50% of the formal sector. Furthermore, only 10% of the unemployed have achieved this level of inclusion. In other words, the Peruvian unemployed are almost at the same level as the informal sector in terms of financial inclusion.

“When we talk about physical establishments, we are talking about establishments where there is a lot of informality, especially in small businesses. They prefer cash because it is a means of payment that enables the informal economy,” says Jaime Montenegro, leader of the Digital Transformation Center of the Lima Chamber of Commerce (CCL). In light of this, digitalization in payments could boost financial inclusion.

Smartphones as an opportunity

Nearly half of those who participated in the Minsait Payments study consider smartphones to be a key tool for the digitalization of transactions, and also to be considered allies in financial inclusion.

Jimena Navarro, Premium Segment Manager at Niubiz, highlights the flexibility of using cell phones as POS.

“You only need a smartphone to turn it into a point-of-sale terminal. Niubiz VendeMás has surpassed 55,000 transactions and raised more than S/17 million in 2023 thanks to SoftPOS technology. The use of smartphones democratises access to financial services, allowing more businesses to participate in the country’s digital economy,” he says.

Digital wallets in Peru

• In May, the number of interoperable transactions per month with the Plin, Yape and Bim electronic wallets was surpassed, which represents a milestone in the digitalization of the country.
• Jimena Navarro, Premium Segment Manager at Niubiz, predicts that this year will close with more than 1 billion transactions, thus doubling the results for 2023 (556 million transactions).
• Jaime Montenegro, leader of the CCL’s Digital Transformation Center, points out that there are already nearly 18 million Peruvians who use digital wallets to make online transactions, especially in physical establishments.