Payment’s ecosystem and their different verticals in Nicaragua

By: Mónica Brenes & Rodrigo Taboada

The payment ecosystem is made up of the different means of payment that exist within a financial system, which may vary depending on the territory in which the user is located.

According to a study conducted in 2022 by the Inter-American Development Bank (“IDB”), it is estimated that by the end of 2021, a total of two thousand four hundred and eighty-two (2,482) fintech companies were identified in Latin America, with Brazil, Mexico and Colombia being the main markets in this area.

The most common means of payment are cash and credit and debit cards. However, for some years now, more modern means of payment offered by fintechs have been integrated, such as payment gateways, digital wallets, fund transfers, cryptocurrencies, among others.

Having a diverse payment ecosystem facilitates the development of commerce and consumption, since it provides users with greater alternatives that fit their needs and lifestyles for making purchases and/or paying for services. The diversification of payment methods offered within a territory depends on many factors, such as the scope of technology, financial education and applicable regulations.

Implementing a new means of payment in a country implies a joint effort of the parties involved in the development, since initiatives must be promoted to integrate them into the community. These initiatives involve the development of new laws that must be friendly to startups and thus encourage them to invest in the country, but at the same time be sufficiently careful to provide security to users.

The main players today within a payments ecosystem are banks and fintechs, which until a few years ago had been seen as two separate verticals but are increasingly integrating to offer innovative services to users and meet their needs that increasingly involve less traditional forms of payment such as cash and on the contrary, more modern and agile options such as contactless payments or fund transfers.

Definitely, fintechs have come to revolutionize the payment ecosystem in a positive way, as they adapt to the needs of the modern world and the lifestyle that new generations are developing.

What was once thought impossible, such as paying for electricity with a click from any part of the world, paying a credit card through a mobile application or paying a bill in a store using a QR code from a smartwatch, without having to wait in long lines at banks or institutions or carry a physical wallet, is now a reality that is reaching more users every day. This leads to savings in user time, greater speed in transactions and adaptation to the use of these new technologies. Therefore, the accelerated growth of these instruments must be monitored, as it is a reality that all countries (some sooner than others) are heading towards.