Why Latin America is the next big market for e-commerce merchants

Explosive e-commerce growth

Latin America’s e-commerce market is projected to grow from $159 billion in 2022 to $232 billion by 2026, driven by the region’s rapid digital transformation and a young, tech-savvy population that is increasingly engaging in online shopping. This growth far outpaces the global e-commerce growth average of 7-8%, with Latin American markets experiencing annual growth rates exceeding 30% in some cases.

Brazil is leading the region, with an e-commerce market worth $216 billion as of 2022, and mobile commerce plays a crucial role: over 70% of online purchases in Brazil are made on mobile phones. Similarly, Mexico’s e-commerce sector is projected to grow by over 30% from 2023 to 2026. In Mexico alone, e-commerce sales rose from MXN 758.7 billion ($42.8 billion) in 2020 to an anticipated MXN 1.3 trillion ($70.9 billion) in 2024. The rise in internet and smartphone access – now reaching over 80% penetration across the region – provides a prime opportunity for e-commerce merchants to capitalize on a mobile-first, highly connected consumer base​.

Mobile commerce leading the way

Latin America’s high mobile penetration rate, exceeding 80%, is stimulating significant growth in mobile commerce. With over 260 million mobile phones in Brazil alone and affordable data plans becoming more accessible, consumers are embracing m-commerce at record rates. Brazil and other Latin American markets are heavily influenced by social commerce, with consumers engaging with brands on platforms like WhatsApp, Instagram, and Facebook.

Social media channels thus present some major opportunities for e-commerce merchants to leverage social commerce strategies, integrating payment solutions that align with the preferences of mobile-first consumers. This focus on mobile commerce makes a localised, mobile-friendly approach essential for merchants aiming to thrive in Latin America.

Evolving regulatory frameworks and financial innovation

Latin America’s regulatory landscape is shifting to support e-commerce growth, with many countries embracing fintech innovation and policies promoting financial inclusion.

In Brazil, for example, the Central Bank’s open banking regulations mandate standardised APIs for banks, enabling greater data-sharing and integration of financial services across platforms. This initiative aims to democratise access to financial tools and foster a more competitive market.

Mexico, on a similar path, introduced its Fintech Law in 2018, establishing a legal framework for financial technology companies to operate with greater transparency and accountability. These regulatory moves are designed not only to support e-commerce but also to address financial exclusion, a persistent challenge in many Latin American countries.

The regulatory shift is fueling an impressive growth in the region’s fintech sector. According to recent data from the Inter-American Development Bank and Finnovista, Latin America now hosts over 3,000 fintech startups, up from just 703 in 2017. Many of these companies focus on providing accessible financial services to the unbanked or underbanked, including digital loans and payments. With regulatory support, the fintech revolution is not only reshaping finance but also empowering millions by closing the financial accessibility gap.

Addressing e-commerce fraud and security concerns

The region experiences a 20% revenue loss from fraud, and approximately 4% of e-commerce orders are fraudulent, underscoring the need for robust security measures. Merchants entering this market should adopt advanced fraud prevention technologies such as dynamic CVV for online purchases, multi-factor authentication, and AI-driven fraud detection systems.

In Peru, for example, second-factor authentication is now mandatory for online transactions, reflecting a broader move across the region to protect consumers and businesses alike from fraud. Effective fraud prevention strategies are essential for building consumer trust and providing secure shopping experiences in Latin America​.

PPRO’s LATAM payment solutions for international merchants

For international businesses looking to tap into Latin America, PPRO provides a comprehensive solution that simplifies local payment integration across the region. By partnering with PPRO, merchants can easily offer essential local payment methods like Pix, Boleto Bancário, and OXXO without the need to navigate complex regulatory requirements or set up local entities.

As a Merchant of Record (MoR), PPRO handles essential tasks such as local payment collection, tax filings, compliance, and currency conversion. This approach allows businesses to operate seamlessly across Latin America’s diverse regulatory environments and payment preferences, improving authorization rates and providing consumers with a fully localized payment experience. For businesses aiming to expand into Latin America, PPRO’s LATAM solutions offer streamlined, efficient market entry with maximum reach and minimal operational barriers.