Brazilian fintech Koin announced a partnership with U.S. payments giant Mastercard to advance Buy Now, Pay Later in Latin America over the next five years.
The partnership marks “an important step” towards accelerating the adoption of alternative payment methods in Latin America, the fintech said in a press release. The company said that a low credit penetration rate in Brazil and the rest of the region renders a strong case for establishing new models to advance inclusion.
A global trend in the past few years, BNPL payments have finally begun to pick up pace in the region, with companies such as Koin as one of the pioneers in bringing the model to Brazil. The concept of BNPL is not exactly new in Latin America, as installment-free payment options were already standard.
BNPL payments growing in LatAm
However, BNPL payments are gradually growing as an alternative to traditional methods, allowing clients to pay in installments without using a credit card. Companies offering such services are developing in Latin America, drawing significant investment transactions.
In the case of Koin, its partnership with Mastercard will allow its BNPL payment modalities to be offered to a base of more than 90 million merchants who already use Mastercard’s products. According to the company, this will increase sales, a higher average ticket, and a lower shopping cart abandonment rate.
”Together, we were able to create an innovative payments ecosystem and launch solutions that provide more buying and selling opportunities for the entire region,” said Nicolas Obejero, CEO of Koin. “The partnership with Mastercard will support us to benefit more merchants and their end customers, allowing them to operate safely and with sustainable growth.”
BNPL market to grow fourfold
The opportunity for BNPL providers to stand out as an alternative for e-commerce transactions is relevant. According to Americas Market Intelligence, the model could capture up to 20% of e-commerce in LatAm in the following years, up from single digits. A global report by Global Data suggested that the BNPL market could grow fourfold to over $500 billion by 2026. Latin America could take as much as 10%, Koin estimates.
The announcement comes as Koin is eyeing a regional expansion. Founded in 2017, Koin announced its intention to take its BNPL products to Latin America this year. The company is starting in Mexico, where operations are expected to begin before the end of the year. The company said Colombia is next on the calendar, although a launch date could be expected in late 2023.
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“As the fintech partner of choice, we actively support, and we are continuously co-innovating to not only expand access to financial services but also deliver greater consumer choice when it comes to payments,” said Mastercard’s Thiago Dias, Vice President, Fintech and Enablers, Latin America and Caribbean.