How People Pay P2B Payments
It's an interoperable world
And digital wallets thrive in it
Amidst the rise of instant payments and account-to-account transfers, another P2P-born payment method is gaining significant traction in emerging markets: digital wallets, especially those with interoperable capabilities.
They are convenient and secure, and for many people in rising economies who are unbanked, they are emerging as promising financial alternatives, rapidly gaining a substantial user base in some markets.
In addition to major players like PayPal, Apple Pay, and Google Pay, regional providers are also making a strong impact, such as NuPay in Brazil, Nequi in Colombia, and Mercado Pago in multiple LatAm markets.
“Digital wallets will keep growing despite the rise of instant payments, providing secure ways for people to make payments both online and in-store,” says Juliana Etcheverry, Director of Country Growth – Latin America at EBANX. According to her, one of the main reasons for their stickiness is how they integrate different payment methods and features, offering a seamless way for consumers to pay while also helping merchants reach a broader audience.
From Etcheverry's perspective, wallets and instant payments serve different purposes. “Digital wallets are about convenience, security, and integration with various payment methods and services. Instant payments are valued for their speed and low cost, making them ideal for quick transfers and payments between individuals and businesses. Both are likely to keep growing and complement each other.”
“Digital wallets will keep growing despite the rise of instant payments. They integrate different payment methods and features, offering a seamless way for consumers to pay while also helping merchants reach a broader audience.”
Juliana Etcheverry
Director of Country Growth – Latin America at EBANX
Many wallets provide not only P2P instant transfers but also a wide array of financial features and transaction options, such as bank accounts and credit cards, as well as a host of other convenient features. Among these is the ability to pay utility bills and for public transportation directly within the app, as well as storing details for various loyalty programs.
More than this, wallets that offer interoperable capabilities can integrate with other QR code-based payments and instant rails, benefiting from an open ecosystem where money moves faster.
The evolution of digital wallets in emerging markets
At first, digital wallets expanded as an instrument for financial inclusion among the unbanked population. “This rapid expansion has been driven by economic growth, widespread smartphone ownership, and the country's historically large unbanked population," states a recent report from JP Morgan about the growth of digital wallets in Colombia. The document also adds that “as users never have to visit a branch, it is an effective and popular solution for those previously without bank accounts.”
Now, in a world where most adults have an account and instant payments and A2A transfers have become widespread, the wallets that establish a closed-loop system will gain traction, taking advantage of their user base and innovating quickly to go beyond monetary transfers. In this context, online transactions will be key for wallets to sustain their relevance.
“There is a low-hanging fruit there. These companies’ customers are extensively using their mobile phones, are tied to digital infrastructure, and are eager to buy online. This has the potential to explode in digital commerce,” says Leandro Carmo, Brazil Regional Director at EBANX.
“Historically, digital wallets grew by focusing on the long tail, mainly the unbanked population. But in the e-commerce world, they have the potential to boom because of their ability to reach a younger, digitally savvy population. It’s a perfect match,” he adds.
"I foresee wallets gaining even greater traction as they establish a closed-loop system and leverage the extensive infrastructure behind them. There is a low-hanging fruit there."
Leandro Carmo
Brazil Regional Director at EBANX
This was the case for NuPay in Brazil. Launched in 2022 by Nubank, a credit card operator that has grown into one of the world’s largest neobanks, the wallet has continuously evolved, enhancing its features and capabilities to appeal to younger online consumers. With nearly 40% of its credit card volume being spent online, Nubank capitalized on this opportunity and launched NuPay as “an innovative online payment” that allows customers to finalize their e-commerce purchases “with a few clicks.”
Besides focusing on a better user experience, with direct integration to merchants’ checkout and no need to input customer data, NuPay also leveraged the fact that its transactions are chargeback-free. Unlike a credit card, the wallet requires customer authentication for every transaction, enhancing the security level.
In addition, NuPay has introduced a highly popular credit feature that previously was only available within credit card rails: installment payments. This enables users to divide their purchases into up to 24 monthly payments at selected stores, further solidifying its appeal.
Carmo highlights that, in the case of Brazil, wallets that implement consumer benefits, including expanded credit availability and installment options, could pose competition to Pix. "Wallets can deliver even faster solutions than Pix, which operates on its own evolutionary roadmap,” he says. Pix is also set to have recurring and credit capabilities, but its evolution moves slower –it's a government-led process that has to be agnostic and involve all players in the ecosystem. "With wallets, Pix should face some competition.”
"In Brazil, wallets can deliver even faster solutions than Pix, which operates on its own evolutionary roadmap –posing a potential competition to the instant payment.”
Leandro Carmo
Brazil Regional Director at EBANX
Another successful wallet example comes from Mercado Pago in Argentina, which profited from Mercado Libre infrastructure. As the regional e-commerce giant's fintech division, it now offers various services, including cashback, a loyalty program, transportation ticketing, and consumer financing, in addition to its core shopping platform. It has grown into a leading force in Argentina's e-commerce sector, driving digital wallets to capture a 30% market share in the country—the highest in Latin America.
Finally, Peru is emerging as a success story in the interoperability of digital wallets, driving the adoption of digital payments and e-commerce. Players like Yape and Plin thrive in an ecosystem where QR codes are accepted across multiple financial operators, creating a seamless payment experience for users, which resembles Brazil's Pix role in boosting digital and instant transactions.
Under interoperability guidelines set by the Peruvian Central Bank in 2022, the country's clearing house —Cámara de Compensación Electrónica (CCE), owned by 15 financial institutions and responsible for all bank-to-bank electronic transactions in Peru— has integrated more than 20 financial institutions into a unified real-time payment network, with additional fintech companies and telecom carriers set to join the system.
This has led digital wallets to flourish in the country. In digital commerce, they now account for 10% of all online value transacted, and are expected to grow by nearly 20% year over year through 2027.
The features that make wallets a perfect fit for e-commerce
The growing traction of wallets in digital commerce stems from some of their key features that not only mirror traditional payments but go beyond.
First, wallets and other alternative payments are investing in their ability to replicate traditional card features, which is propelling their growth in e-commerce. Many of them, for instance, have introduced recurring transaction capabilities, a feature traditionally exclusive to cards.
“Previously, most alternative payments were limited to one-off transactions, which restricted their use cases. By enabling recurring payments, wallets are now better suited for subscriptions and other recurring purchases,” says Eduardo de Abreu, Vice President of Product at EBANX.
Compared to cards, wallets still have the advantage of fresh features to improve approval rates for recurring transactions, especially in the case of insufficient funds –the top reason for credit card declines in emerging markets. When a transaction fails, the app can send a push notification to the user, deduct the value from the wallet balance or another stored card, and even offer a credit line for the customer.
Another critical feature mimicked by digital wallets from cards is credit functionalities. These solutions offer users greater flexibility and purchasing power by tying credit products directly into wallets, such as installments or BNPL offerings. That is the case of Mercado Pago Credit, for instance.
Finally, wallets strongly focus on privacy and security, offering an advantage for both consumers and merchants. “Consumers like them because they're not giving their payment information directly to a merchant, and merchants like them because they're free of chargeback,” says Abreu, from EBANX.
More recently, players have been investing in biometric authentication, such as fingerprint or facial recognition. This adds another layer of security to online transactions, providing both users and merchants with confidence.
As André Peixoto, Director of Operations at EBANX, explains: “The main goal of alternative payments is to create access. The extent of access they provide depends on the suite of services included in their offerings.”
As wallets continue to innovate, they are poised to become the preferred payment option for a wide range of e-commerce transactions.
“The main goal of alternative payments is to create access. The extent of access they provide depends on the suite of services included in their offerings.”
André Peixoto
Director of Operations at EBANX
More consumer reach equals more revenue
At the end of the day, digital wallets can bring more revenue to merchants, thanks to reaching a broader audience that otherwise would not be able to buy online.
In some countries, wallets have become daily payment instruments, and most wallet owners do not have access to credit cards—which means an incremental customer base for companies. According to Statista's consumer survey data, about half of mobile payment users in LatAm, Africa, and Asia countries don't own a credit card. However, a massive 99% of them buy online.
A good example of this trend is Colombia, where 48% of mobile payment users do not own a credit card. Colombian consumers have steadily embraced digital wallets, with active users surging from 27 million in 2021 to around 55 million in 2023, per a JP Morgan study.
One of the main wallets in the country is Nequi, a digital wallet-turned-neobank launched nearly a decade ago by Bancolombia as an initiative to enhance financial inclusion. Nequi offers its 20 million users (about half of the country's adult population) a user-friendly mobile platform for services such as payments, savings, and loans. It has rapidly gained popularity among students, street vendors, and informal traders.
A recent anecdotal movement highlights Nequi's role in digitizing daily transactions: street and informal vendors from Colombia often display handwritten signs stating “Sí hay Nequi” (“Nequi is accepted here”) or similar messages, accompanied by QR codes to facilitate transactions. Recognizing this organic adoption, Nequi embraced its identity as a tool for “la calle” (the streets) to reflect its deep connection to grassroots commerce.
"In countries with lower banking penetration rates, such as Colombia and Peru, wallets play a significant role," explains Peixoto, from EBANX.
Digital wallets fuel a +25% growth in revenue trends for online businesses
The expansion of digital wallet options at checkout has proven transformative for businesses across diverse verticals, enabling significant growth in sales by reaching broader customer bases. Two notable cases, derived from EBANX internal data, illustrate the impact of this strategy.
For a gaming company operating in Colombia, integrating the digital wallet Nequi at checkout in early 2023 marked a turning point in its operations. Over the following two years, Nequi facilitated a 25% increase in average daily revenue and a 32% rise in daily transactions, driving substantial business growth. Currently, Nequi accounts for 31% of the company’s revenue and 33% of its transactions in Colombia, becoming a cornerstone of its regional operations.
Similarly, the introduction of NuPay revolutionized the operations of a travel company in Brazil, LatAm's largest market. In mid-2023, the company integrated NuPay into its payment ecosystem, resulting in a remarkable 47% increase in LatAm average daily revenue within just six months. By the end of 2024, NuPay had become the company’s dominant payment method, accounting for 80% of its LatAm revenue and unlocking access to a broader customer base.
These success stories highlight how digital wallets can not only enhance transaction volumes but also broaden customer reach and drive growth across industries, making them essential tools for businesses aiming to thrive in competitive markets.
