Crypto-linked prepaid cards are gaining strong momentum in the Latin American region

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The interest and adoption of cryptocurrencies have been on the surge globally. The growing consumer interest in the space has also led to many countries passing regulations to offer more clarity around cryptocurrencies. While the interest continues to grow globally among consumers, Latin America has experienced impressive levels of crypto adoption over the last few years.

The high level of crypto penetration in Latin America can be attributed to the growing inflation levels, the lack of penetration of traditional banking services, and political instability. All of these factors have created the perfect environment that promotes the adoption of cryptocurrencies in the region. Notably, the growing adoption has also resulted in the widespread usage of digital currencies.

According to PayNXT360 estimates, about 22% of Latin Americans have made at least one transaction with cryptocurrencies. This shows that a growing number of consumers are not only interested in investing in cryptocurrencies but also using their investments to make purchases and merchant transactions. This consumer behavior is driving the momentum for crypto-linked prepaid cards in Latin America.

In 2022, many cryptocurrency exchanges, both global and regional, have launched crypto-linked prepaid cards in Latin America. These launches are part of their strategy to leverage the growing popularity of altcoins among consumers by offering them an easier way to spend their cryptocurrencies and drive growth in the region. For instance,

• In August 2022, Binance, one of the leading global cryptocurrency exchanges, announced that the firm is making its initial push in the Latin American market through a partnership with Mastercard. Under the collaboration with Mastercard, Binance launched a crypto-linked prepaid card offering, which will allow cardholders to make conversion of cryptocurrencies to fiat currency in a simple manner. This prepaid card is aimed at offering a seamless transactional experience to Latin Americans. Notably, to make the prepaid card more attractive to crypto holders, Binance is also offering up to 8% cashback on a few limited purchases.

Along with global cryptocurrency exchanges, regional players have also joined the crypto-linked prepaid card bandwagon in Latin America. For instance,

• In August 2022, Ripio, a Latin American cryptocurrency exchange, announced that the firm had launched its prepaid card offering for its users in Brazil. Notably, the crypto-linked prepaid card allows cardholders to make payments in Brazilian reals and 28 cryptocurrencies that Ripio has listed on its platform. This prepaid card offering is similar to that of Binance as it offers cardholders 5% cashback rewards in Bitcoin.
• By the end of 2022, the firm is aiming to release 250,000 prepaid cards, which the firm has developed in partnership with Visa. Along with its launch in Brazil, the firm is also planning to launch the prepaid card offering in Argentina in H2 2022. With its operations in Mexico, Colombia, Uruguay, and Spain, the firm can also expand its prepaid card offering in more regions going forward.

With several crypto-linked prepaid card programs currently live in the Latin American region and other value-added services running locally, Visa is leading the space in delivering more access and value to the crypto ecosystem in Latin America. For instance,

• In 2021, Visa partnered with Lemon Cash, an Argentina-based cryptocurrency exchange, to launch Visa cards that offer 2% Bitcoin cashback on all transactions. In 2022, Visa is extending its partnership with Lemon Cash to launch prepaid cards in Argentina. This launch would be through an agreement made with cryptocurrency trading platform Satoshi Tango and Crypto.com cards. In similar partnerships, Visa teamed with neo-banking platform Zro Bank and crypto service provider Alterbank in Brazil.

From the short to medium-term perspective, Visa is planning to further expand its crypto cashback prepaid card offering across the Latin American region, including in Mexico, Colombia, and Peru. As Visa intends to build on crypto schemes in the region, PayNXT360 expects more such crypto-linked prepaid card launches over the next three to four years. This will also allow the firm to manage the fast-evolving NFT ecosystem in Latin America.

Notably, these crypto-linked prepaid card launches from exchanges and payment providers highlight an effort to normalize the use of cryptocurrencies by using card networks in a way similar to international transactions where both parties use or receive the currency of their choice. PayNXT360 believes that these moves, which involve the usage of prepaid cards as a medium to move cryptocurrencies, are crucial for the growth of the sector, as cryptocurrencies move from speculatory investing into an everyday payment tool that complements cash, credit, and debit.

To know more and gain a deeper understanding of the prepaid card market in Latin America, click here.