Merchant Acquiring: Latin America

The Latin American region is an attractive one for merchant acquirers. Acquiring margins are under downward pressure globally but merchant service charges (MSCs) remain high across most markets in the region.

MSCs are vitally important in the acquiring model: after stripping out interchange, MSCs are the bulk of revenues available to the industry. In common with all global regions, Latin America has experienced a decline in MSCs in the last decade. However, the fall has been less pronounced than in most regions of the world and average MSCs remain at very high levels -- the highest of any region studied by Lafferty Research.

Weighted average MSC is estimated at 2.45 percent in Latin America. By contrast, MSCs in North America average around 2.2 percent while in Western Europe it will dip below one percent in 2016 as interchange caps take their toll.

Inevitably, more downward pressure will be exerted on the MSC in the coming years. Competition between acquirers alone will be enough to lower MSCs, but the greatest risk comes in the form of regulation, as pressures from merchants to lower interchange will build. Governments looking to promote greater use of electronic payments may also seek to lower MSCs in order to increase the number of merchants accepting card payments.

Nevertheless, at this point there is only one Latin American market of the 11 included in this study to have been significantly impacted by regulation on MSCs. The large unbanked population in the region ensures there is plenty of room for growth -- important to note in a region with a preference for credit cards over debit cards.

Verisk Financial Research's comprehensive report on merchant acquiring in the Latin American region contains industry-leading data on 11 markets and identifies regional trends in the acquiring landscape. Our country-level analysis profiles the leading players and details the important competitive and regulatory issues.

Merchant Acquiring Latin America provides a commentary on the key themes in each country's cards and payments market, plus a regional benchmarking overview including:

Credit card adoption and use
Merchant Service Charges (MSC)
Income from MSCs

Databanks going back to 2010 for each country feature:

• Credit card numbers, including consumer and commercial credit cards
• Total credit card metrics, including billed volumes, transaction volumes, and average transaction values -- split by POS and ATM data
• Credit card profitability indicators: rollover rate, net credit losses, credit card interchange fees
• Debit card numbers: number of cards, average number of cards per 100 adults
• Debit card metrics: billed volume on debit cards, transactions on debit cards, average transaction value on debit cards, average transaction numbers per month.
• Merchant acquirer credit card market share
• Credit card merchant service charges
• Merchant acquirer debit card market share
• Debit card merchant service charges
• Credit card issuer/issuing processor relationships
• Credit card acquirer/acquiring processor relationships
• Merchant acquirer credit card market share
• Credit card merchant service charges
• Merchant acquirer debit card market share
• Debit card merchant service charges
• Online merchant acquirer market share

Merchant Acquiring Latin America is essential reading for cards and payments professionals seeking to understand and profit from developments in the region's merchant services market.

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