The Latin America and the Caribbean (LAC) region is undergoing a financial transformation. A new Inter-American Development Bank (IDB) report titled “Beyond Cash: The Digital Payments Revolution in Latin America and the Caribbean” documents how the region has moved from cash-dominated economies to increasingly digital ones—unlocking new pathways for financial inclusion.

Across six economies including Bolivia, Brazil, Chile, Costa Rica, Mexico, and Peru, the number of digital transactions tripled between 2019 and 2023, showing clear evidence of how quickly digital payments are becoming part of daily life in the region. In Bolivia, for example, after the introduction of an interoperable payment system in 2022, the number of low-value interbank transactions increased fivefold. In Peru, interoperability between the country’s two largest digital wallets led to a sevenfold increase in interbank transactions within two years. 

WorldPay estimates show that cash use for retail transactions in the region's largest economies—Brazil, Chile, Colombia, Mexico, and Peru—fell from 38 percent in 2020 to 25 percent in 2024. There is a clear behavioral shift toward digital payments: the Latinobarometro 2023 survey data shows that in almost all countries in the region, individuals prefer to use digital payments over cash.

The IDB report also argues that this transformation was the product of private sector innovation and, importantly, sound public policies to promote interoperable payment systems. The report identifies 17 countries in LAC  that have implemented private or public instant and interoperable payment systems, which are digital payment infrastructures that allow individuals and businesses to transfer funds instantly and at a low cost. A key feature of these systems is interoperability, which means users can send and receive payments across platforms, regardless of their financial provider, making the digital payments ecosystem more open and accessible to all. These systems can be critical for fostering competition in the financial sector and expanding financial inclusion. The report highlights that eleven of these systems in LAC include regulatory policies that promote interoperability. 

This transformation gives countries an opportunity to learn from the Latin American experience. Evidence collated by IPA and the Toulouse School of Economics examines how instant payment systems like Brazil’s Pix are impacting economic growth by enabling greater participation in the banking system and improved access to credit. What is particularly interesting is that a 4 percent increase in active Pix users corresponds to a one percent rise in people establishing a relationship with a new bank—demonstrating how digital payments can open the door to broader financial inclusion (Sampaio and Ornelas, 2024).

Following these rapid gains in digital payments, the stage is set for the next wave of financial access. Open finance initiatives, like the one adopted in Brazil and currently being developed by several other countries , allow users to securely share their financial data with providers, enabling financial institutions to build tailored products and services. Open finance initiatives can, as a result, help close information gaps, lower the costs of assessing creditworthiness, and foster greater competition. The benefits of open finance are particularly pronounced for micro and small businesses, which typically face significant barriers to accessing credit. In Brazil alone, micro, small, and medium-sized businesses (MSMEs) face a credit gap of $593 billion . Across Latin America and the Caribbean, the region represents 18 percent of the total MSME finance gap across all emerging markets.

 Brazil's comprehensive open finance framework, rolled out in 2022, demonstrates the potential future of digital finance in the region. Under this framework, transaction records from Pix can be voluntarily shared with third-party lenders through consent-based data-sharing. For small business owners, this mechanism can help establish creditworthiness and qualify them for more tailored and affordable loans.

Despite the rapid growth of instant payments—particularly Pix—scaling the adoption of open finance, especially among small businesses, remains a significant challenge. To understand barriers to uptake, IPA conducted a pilot study in Brazil in 2024, which revealed that businesses lack understanding of open finance and its benefits, resulting in low subscription rates. This knowledge gap is particularly concerning given the $593 billion financing gap noted above for MSMEs in Brazil. These findings underscore the importance of identifying effective strategies for encouraging businesses to adopt open finance safely and securely. Beyond initial uptake, it is equally critical to evaluate whether—and how—open finance expands access to credit, savings, and insurance for small businesses, and ultimately whether these services contribute to improved financial health outcomes.

To understand how open finance adoption can be scaled and how that can translate into broader access to credit for MSMEs, IPA is conducting a randomized controlled trial (RCT) in Brazil, in collaboration with researchers from the University of Warwick, Bocconi University, INSPER and the Banco Central do Brasil (BCB). The study will aim to answer the following questions: 

1. What firm characteristics are associated with higher adoption rates of Pix and open finance?
2. Does access to detailed Pix transaction data improve credit access for MSMEs?
3. To what extent does educating firms on the advantages of open finance influence their use of Pix and willingness to share financial data?

Results will be available early 2026. 

Evidence and Open Questions: What We’re Learning 

At IPA, we see this moment as a unique opportunity to build evidence on how digital public infrastructure (DPI)—especially instant and interoperable payment systems—can deepen financial inclusion, drive competition and innovation, and ultimately fuel economic growth. Through our research , we are asking questions such as:

• How can instant payment systems reach micro and small merchants that still rely on cash?
• What regulatory designs encourage active use, not just account ownership?
• What impact do instant payment systems have on market level competition and innovation?  

Early evidence seems promising. But more needs to be done to ensure that adoption increases, usage accelerates, and consumers remain protected. IPA’s research will help identify which policies and interventions can translate digital infrastructure into meaningful financial inclusion—ensuring that the digital payments revolution reaches those who need it most.