Panama is a country whose economy is rapidly developing, and consumers are increasingly adapting to digital options that facilitate their financial transactions. In this blog, we will analyze the current trends in the payments market in Panama and how the growing popularity of digital options is shaping the country’s financial future.
The role of cash in Panama
Although the adoption of digital payment alternatives is increasing in Panama, cash remains the most used form of payment in the country. According to the World Bank, in 2020, 75% of retail transactions were made in cash. This is because the level of banking among Panamanians is still low, with only 45% having a bank account, and there is limited access to banking services in some parts of the country, so they prefer to have cash as a means of payment.
In this sense, options such as Western Union stand out as the preferred ones by Panamanians when it comes to making their payments, so businesses that want to enter this market must consider payment platforms that integrate everything in one place, like PayRetailers, which has the main financial partners and payment operators in the region, facilitating the integration of its API into existing systems, offering greater efficiency and security in local payment processing. This provides many conveniences, as in addition to having multiple trusted payment methods that deliver greater versatility, with digital payments, customers can make their purchases from the comfort of their home or anywhere with an internet connection, saving time and avoiding errors in the payment process. This has made examples like digital cash payments very popular, where the consumer buys online and can pay for their digital purchases at physical points of sale.
The growing popularity of mobile and electronic payments
Looking at the current situation of the digital payments ecosystem in the country, according to a report by the Inter-American Development Bank (IDB), only 4% of transactions are made digitally. Nonetheless, Panama has become a leader in the digital market in the region, with a score of 54.6 in the IIF 2022 ranking.
How is the adoption of digital payments being driven in Panama?
There are two main factors:
- The growth of e-commerce, which increased by more than 80% since COVID-19. This made digital retail and marketplaces more favorable for accepting digital payments, increasing the demand for such services.
- Penetration of smartphones, where 137% of the population uses mobile devices, making them the preferred way for consumers to access the internet and make their online purchases, creating an ideal environment for digital payments.
Consumers are looking for more convenient and secure ways to carry out financial transactions. In fact, according to the Inter-American Development Bank, in 2020, 65% of Panamanians used digital financial services to make transfers, pay for services, and shop online.
In addition to mobile payments, electronic payment methods such as bank transfers and credit and debit cards are also becoming increasingly popular in Panama. According to the National Bank of Panama, the number of credit and debit cards issued in the country increased by 11% in 2020 compared to the previous year.
The role of payment providers
The presence of international PSPs in Latin America, such as PayRetailers, has had a transformative effect on the region’s markets. As mentioned earlier, merchants can now process payments easily and efficiently, in a single API, allowing them to reach more consumers and increase their sales, as well as streamline cross-border transactions without the need for a local entity.
This change not only benefits merchants but also has a positive impact on financial inclusion and economic growth in the region. An example of this is Panama, where PayRetailers facilitates end-users to make payments with their preferred methods, allowing these individuals to be included in the financial system and contribute to the country’s economic development.
Overall, PSPs can impact financial inclusion and drive economic growth in Latin American countries. If you want to learn more about PayRetailers and its entry into the region, do not hesitate to contact us.