From Adoption to Leadership: How LATAM Is Powering the Next Wave of Digital Payments

Digital wallet brands such as NuPay, Mercado Pago and PicPay all boast impressive adoption figures with significant growth in recent years. Mobile wallets have seen tremendous growth across LATAM more broadly, with smartphones now accounting for two-thirds of online retail transactions in the region, according to research from JPMorgan.

Offering the likes of exclusive benefits, interest earned on wallet balances, and public transport cards, many of these services are evolving into “super apps”, becoming users’ primary financial accounts. The security provided by many of these services, such as Multi-Factor Authentication and data tokenisation, is also meeting demands for safer payments as well as building trust. 

The popularity of metal cards

At the same time, the physical card’s popularity endures. Little of the banking experience is tangible, and many brands are increasingly finding the physical card can be a powerful marketing tool to keep themselves front of mind amongst customers. At Thales, we’ve seen this shift first hand - the card itself is becoming a powerful statement of identity, status and brand. We have years of experience designing and manufacturing physical card schemes, with around 300 million of our cards in use within LATAM.

LATAM is a popular market for metal cards, where several banks and fintechs have made this available. Heavier and more substantial than plastic cards, metal cards enhance customer engagement by giving a premium feel and offering a more tactile payment experience for customers.  Volumes continue to rise steadily, driven by a growing number of banks upgrading their premium card portfolios. The region has also taken a pioneering role with the world’s first launches of top tier VISA and Mastercard programs, such as Visa Privilege / Plus and World Legend where metal cards are now mandatory.

Initially starting amongst Ultra-High Net Worth (UHNW) clients, a rapidly increasing base of cardholders are now adopting premium metal cards, with wider market trends showing a structural shift towards these heavier cards.

Invisible payments

At the same time as the enduring appeal of premium physical cards for some payment experiences, the phenomenon of invisible payments has emerged. Secure, invisible payment is made possible thanks to a combination of multiple technologies, of which the most important are card tokenization and biometrics.

These kinds of tokenised payments, which translate into the same, simple ‘Click to Pay’ experience for consumers when buying online that they’re used to in-store, are growing in popularity - already nearly 50% of Visa’s e-commerce transactions globally are tokenised, while in Latin America specifically consumers are finding these choices highly convenient.

With tokenization, a token replaces sensitive credit card numbers or primary account numbers (PAN) with a random string of characters only valid in a specific setting – like a merchant, app or device. If an attacker accesses the token, it doesn’t contain real payment details, making it useless. Biometrics, meanwhile, are the other part of the puzzle. Consumers can simply use a fingerprint or face scan to sign in, rather than hard-to-remember, easy-to-steal passwords.

The Payment Passkey brings both these technologies together. Based on FIDO technology,  , it lets consumers complete a checkout with just a ‘yes’ or ‘confirm’ on a trusted device. They can use a unique face scan or fingerprint in lieu of typing out a vulnerable password manually. It works by binding a passkey and a card on a user’s device which cannot be stolen. The likes of Mastercard have had payment passkey integrations with notable services in the region for some time, including Brazil events platform Sympla and global payments orchestrator Yuno, helping make online transactions both faster and more resilient against fraud and scams. In conjunction with the additional security factor offered by biometrics, payment passkeys are helping drive an authenticated payments revolution.
 

The power of HCE (Host Card Emulation) for mobile payments

As well as innovations from the various organisations involved in a payment chain, the large mobile software platforms have had a huge influence on user behaviour. The emergence of Apple Pay and Google Wallet have been transformative in making payment via smartphone a mainstream reality. The main question has been how to manage all this securely. Legacy banking systems with physical cards were primarily offline, but smartphone payment services need to be online and accessible in real-time as part of individual payment transactions. Host Card Emulation (HCE) is a way of balancing these two needs. 

HCE makes mobile payments possible, but without storing critical payment credentials on the phone itself. A secure shared repository – such as the card issuer’s data centre or private cloud – is used instead, with limited use credentials delivered to the phone in advance to enable transactions to take place. HCE also provides the communications channel in which payment credentials are passed to the point-of-sale terminal as a customer makes a payment. It all relies on Hardware Security Modules, which provide the underlying cryptographic algorithms and key management schemes.

Thales’ HCE technology is currently available on Android – essential in a region like LATAM where Android smartphone penetration is as high as 70%, and the top 10 best-selling smartphones across the region in 2025 were all Android devices.  With HCE available, it is a boon for both financial inclusion, as well as for the ability to create a bank account in minutes – backed if needed with an innovative physical card.  

The innovation in payments over the last few years have brought great convenience and flexibility to consumers. Using mobile payments technology has in some cases led to new business models and opportunities – alongside new data protection challenges. For physical cards, meanwhile, innovations in design and material have come alongside an ongoing focus on maintaining robust security. As payment models and processes continue to evolve, it is vital the associated security stays flexible enough to adapt to these changes.