Venezuela, the unlikely leader of digital payments

 

Not so unlikely, when you think about it.

Ten days ago, the Caracas International Airport started accepting payments in Bitcoin and other cryptocurrencies. That’s not an exceptional case: adoption of digital payments in Venezuela is many times bigger than in all other parts of Latin America, according to data recently shared with Rest of World:

Venezuela, the unlikely leader of digital payments /img/venezuela-digital-payments.jpg

“Out of 10 million transactions across 17 countries in Latin America over the course of a six-month time period, 28.6% were conducted digitally in Venezuela, compared to an average of 5.93% in the rest of the region”.

Venezuela’s reasons are relatively obvious, its exceptionality not so much

The main reasons why Venezuelans use cash much less than their neighbours are easy to guess: cash insecurity, hyperinflation, and a general economic crisis so bad that for some Venezuelans using their cheap electricity to mine Bitcoins, is the most viable legal way to make some decent money.

What is less obvious is “why ONLY Venezuela?” Being first, OK, someone has to be. But why such large a gap between Venezuela and all other Latin American countries? Why, as Rest Of World writes, “there isn’t always a correlation between a country’s tech ecosystem and its adoption of digital payment tools? Mexico, for example, is a leading hub for fintech startups in Latin America. Even so, it has one of the highest cash usages at microbusinesses, with 97.5% of transactions done in hard currency”.

If anybody has answers, or even just hypotheses, please let me know via email or Twitter, I’d like to know more!

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