Latin America B2B Payments Market

Market Overview

The Latin America B2B payments market size was valued at USD 25 billion in 2021. It is projected to reach USD 57 billion by 2030, growing at a CAGR of 9.1% during the forecast period (2022-2030).

Business-to-business (B2B) payment promotes safer transactions for merchants requiring recurring, periodic transactions and offers a variety of tasks to end users, including accounts receivable, accounts payable, payroll, and acquisition departments. It may involve a one-time or recurring transaction based on the buyer and seller's contractual arrangement. Business-to-business (B2B) payments are more complex than business-to-consumer (B2C) payments because B2B payment processing takes longer to approve and settle the transaction.

Highlights

• The domestic payments dominate the payment type segment.
• The traditional mode dominates the payment mode segment.
• The IT and Telecom sector dominates the industry vertical segment.
• The small-sized industries dominate the enterprise size segment.

Market Dynamics

Latin America B2B Payments Market Drivers:

Increased Demand from Some Businesses

Several industries, such as healthcare and retail, experienced a surge in demand during the pandemic, increasing demand for products and services, which contributed to an increase in B2B payments. The move from cash payments to digital transactions during the pandemic further drove the need for B2B payments. Hence, the global health crisis has moderately damaged the B2B payment business. Nonetheless, industries such as healthcare and others have contributed significantly to the growth of B2B payments, which has had a favorable effect on the B2B payments market.

B2B payment providers have developed new solutions and implemented new technology to overcome obstacles. Automating accounts payable, e-invoicing, and digitizing payments are some of the B2B payment industry innovations. These capabilities have facilitated the execution of cashless B2B transactions from remote places.

Latin America B2B Payments Market Restraint:

Impact of COVID Pandemic

As a result of the unprecedented COVID-19 epidemic, a lockdown was implemented in many sectors, and enterprises were forced to implement several operational modifications. Due to restrictions imposed by the government on the flow of goods, transportation, import and export bans, travel restrictions, event cancellations, and others, many businesses have suffered losses and interruptions.

In addition, due to these abnormalities in business operations, B2B payments have been harmed by low demand for goods and services, an erratic supply chain, and the liquidation of businesses. In addition, the number of business-to-business (B2B) transactions decreased due to government-imposed limitations, resulting in a reduction in B2B payments.

The worldwide health pandemic has created several difficulties for B2B payment service providers due to massive business losses, supply shortages, etc. These factors have resulted in a decline in B2B payments, as businesses have either stopped paying for the acquisition of goods and services from wholesalers or are encountering difficulties in making payments, as business owners need help to conduct cash or in-person transactions due to travel restrictions.

Latin America B2B Payment Markets Opportunities:

Investments by Fintech Companies and Venture Capitalists

Fintech Companies and Venture Capitalists have started to seize the opportunity. Since 2013, financing for Latin American fintech transactions has expanded modestly but has accelerated recently. In 2019, more than USD 2 billion was invested in a Latin American fintech business, representing over 44% of the total investment in the area. The digitalization of the B2B payment arena has made it easier for firms to conduct cross-border commercial transactions, resulting in a rise in international trade and promoting economic growth. This will also aid the business's survival throughout the pandemic.

Segmental Analysis

Latin America B2B Payments Market is segmented into five categories: Payment Type, Payment Mode, Enterprise Size, and Industry Vertical.

Based on the transaction type, the B2B payment market is bifurcated into domestic payments and international payments.

The domestic payments sector owns the highest market and is expected to grow at a CAGR of 10.9% over the projected period.

Based on the Payment Method, the global B2B Payment market is split into traditional and digital submarkets.

The traditional mode dominates the market and is expected to develop at a CAGR of 6.3% over the projected period.

The B2B payment market is categorized based on Payment Method into ACH, Wire, Cheque, Cash, and others.

Other methods are predicted to increase at a CAGR of 9.85 percent during the projection period, making them an important segment.

The B2B payment market is split by industry vertical into manufacturing, IT and telecom, metals and mining, energy and utilities, BFSI, and other segments.

The IT and Telecom segment dominates the market and is estimated to increase at a CAGR of 11.7% over the projection period.

The B2B payment market is categorized based on enterprise size into major organizations, medium-sized enterprises, and small businesses.

The small-sized industries dominate the sector and are anticipated to increase at a CAGR of 11.6% during the projection period.

Regional Analysis

Latin America has become one of the leading rising economies, indicating a promising future as a regional corporate powerhouse. This shift results from greater digitalization and an emphasis on rapid infrastructure development, particularly modernizing domestic and international payments. According to Nium's research, increased internet access, smartphone usage, mobile money accounts, and received remittances have resulted in USD 14 trillion in payment transactions. With 25 percent of homegrown fintech activities in payments and fintech, many foreign businesses seek to increase their presence in Latin America. Several corporations are entering the LATAM market through acquisitions. For instance, Mastercard purchased Mexico's Arcus in 2021 to streamline cross-border and real-time payments in the country and integrate smoothly with the expanding digital economy.

Recent Developments

• May 2021- Sokin and Mastercard signed a comprehensive agreement to deliver fixed-price payment services in Brazil and Mexico.

Latin America B2B Payments Market Segmentation

By Payment Type

• Domestic Payments
• Cross-Border Payments

By Payment Mode

• Traditional
• Digital

By Payment Method

• ACH
• Wire
• Cheque
• Cash
• Demand Draft
• Credit Card

By Industry Vertical

• Manufacturing
• IT and Telecom
• Metals and Mining
• Energy and Utilities
• BFSI

By Enterprise Size

• Large Enterprise
• Medium-sized Enterprise
• Small-sized Enterprise

By Regions

• Mexico
• Brazil
• Argentina
• Columbia
• Rest of Latin America