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Across Latin America, we’re witnessing a massive shift as regions traditionally dominated by cash transactions begin embracing digital financial tools. This transition represents more than just technological adoption—it’s creating new economic opportunities, enhancing financial inclusion, and building resilience against growing cybersecurity threats.

The numbers tell a compelling story: a $448.4 billion digital payment opportunity exists across Latin America, the Caribbean, and the U.S. With nearly 12 million small retailers processing $362 billion in B2C sales — 43% still in cash —a nd 90% of B2B transactions between small retailers and suppliers handled through traditional methods, we’re looking at a financial transformation that’s just beginning.

Today, I’m joined by someone at the forefront of this transition. Walter Pimenta serves as Executive Vice President of Commercial and New Payment Flows for Mastercard Latin America, where he’s leading initiatives to expand SME acceptance solutions, scale enablement through strategic partnerships, and strengthen cross-border payment capabilities.

Walter’s team is also tackling another critical trend: the growing cybersecurity challenges facing SMEs, with recent research showing 46% of small businesses have experienced cyber-attacks, resulting in bankruptcy for nearly 1 in 5 affected companies.

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Tearsheet Podcast · Inside Mastercard's push to move LATAM's small retailers beyond cash

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Diverse markets, Diverse needs

The LATAM region is not a single, uniform market. Mastercard operates across 44 different markets in Latin America. Each country brings its challenges and opportunities. “PC and digital penetration vary widely—from high levels in Brazil and Chile to lower levels in places like Mexico,” Pimenta notes.

This means small business digitization cannot take a one-size-fits-all approach. Some SMEs need basic tools to begin accepting digital payments. Others are already looking for ways to optimize global supply chains and expand their e-commerce footprint. Mastercard addresses this spectrum by providing region-specific SME solutions. It also enables local financial institutions to better serve their markets.

Meeting SMEs where they are

Small businesses in LATAM fall into distinct categories. From individual entrepreneurs and micro merchants to more complex middle-market enterprises, each group has unique financial and operational needs.

Micro merchants often struggle with digital literacy and the cost of accepting digital payments. For them, solutions like Tap on Phone, which turns a smartphone into a payment terminal, can be a game changer. “We’ve eliminated the need for expensive hardware,” says Pimenta. “Now, any NFC-enabled phone can become a secure payment device.”

At the other end of the SME spectrum, middle-market businesses often need support for cross-border payments. It also includes ERP integration and advanced cash flow management tools. “These companies behave like large corporations. And they need systems to manage suppliers, inventory, and payments with scale,” he explains.

CPG partnerships as an on-ramp to digital

Consumer Packaged Goods (CPG) companies are becoming a vital entry point to financial inclusion. Pimenta explains how Mastercard is working with major CPG players. The aim here is to digitize their distribution and payment systems, streamlining the value chain.

Many of these CPGs sell directly to mom-and-pop stores that still rely heavily on cash. This creates inefficiencies for both parties. “The inefficiencies of cash fraud, security are costly for everyone involved,” Pimenta says.

Mastercard is digitizing order placement (through platforms like WhatsApp). It also enables digital payments via smartphones. And, it issues prepaid cards through fintech partners like Migo. “We’re digitizing both the sales and the settlement process,” he adds.

Navigating cybersecurity challenges

The move to digital opens LATAM SMEs to new threats, particularly around cybersecurity. Mastercard research shows that 46% of small businesses in the region have experienced cyber attacks. Many of them face devastating consequences.

To address this, the company is rolling out tools like My Cyber. It is a solution designed to help businesses identify and resolve vulnerabilities in their digital storefronts. “Cybersecurity cuts across all SME segments. We have a responsibility to protect them as we digitize them,” says Pimenta.

Education is also a core focus. Mastercard is building tools to help small businesses go digital. These platforms focus on keeping their operations secure.

Cross-Border Payments fueling growth

LATAM businesses are becoming more globally connected. Cross-border payments also play a crucial role. “Small businesses today want to buy from suppliers overseas. Sometimes it’s cheaper, sometimes better quality,” Pimenta says.

However, traditional international payment systems can be slow, opaque, and expensive. Mastercard’s Move platform aims to streamline this process by enabling faster, more transparent cross-border payments — through local rails, supporting transactions to over 200 markets globally. “We can now deliver transactions to almost any endpoint, account or card,” he says.

The Big Ideas

Small businesses are the economic core of LATAM. “In LAC, 99% of the businesses are small businesses… the economic engine.” Small businesses are not a niche—they are the foundation of the region’s economy.
Digitization looks different across LATAM. “It’s a very diverse region… from a cultural and financial point of view.” Each market requires tailored SME solutions based on digital readiness.
CPG companies are natural partners for driving change. “CPGs have a direct relationship with micro merchants… and share the pain of cash.” By digitizing CPG supply chains, Mastercard helps both vendors and retailers benefit.
Cybersecurity must grow with digital adoption. “We have a responsibility… and we have the technology to help them.” Tools like My Cyber are helping SMEs protect themselves as they move online.
Cross-border capabilities are essential to SME growth. “Small businesses today want to buy from suppliers overseas.” Solutions like Mastercard Move reduce friction in global transactions.

The ubiquity of digital payments is contributing to a surge in chargebacks. The global volume of chargebacks is expected to increase to 324 million in 2028, according to recent data from Datos Insights in partnership with Mastercard.

Source: 2025 State of Chargebacks: A GLOBAL VIEW FOR ISSUERS AND MERCHANTS

A significant chunk of the expected increase in chargebacks will occur in North America, with the expected volume of chargebacks reaching 132.9 million in 2028 from 114.4 million in 2025. By 2028, the total value of chargebacks is expected to increase to $41.69 billion, of which North America will be home to the biggest portion at $20.47 billion.

While the increased adoption of digital payments and the ability to submit disputes has helped build consumer trust, this rising tide of chargebacks has a direct impact on both merchants’ and issuers’ bottom lines.

How chargebacks are impacting business – a break down by industry

Not all merchants are experiencing the rise in chargebacks equally. In fact, merchants operating in the travel and hospitality industry report the highest average chargeback value at $120, with high-risk categories like gaming, gambling and cryptocurrency coming in second at $99.

One reason behind why travel is leading in chargebacks may be the proliferation of third-party travel booking websites and travel agents. Despite customers using these third parties to make reservations, they are not the first point of contact in case an issue comes up. Customers that dispute transactions based on a missed reservation or customer service problems often take up the matter directly with their issuer rather than seeking resolution through the third-party or the merchant directly.

How fraud complicates chargeback management

Added complexity arises with the possibility of fraud. When the amount is low enough, issuers and merchants often opt for write-offs rather than dedicating resources to handling the chargeback.

For merchants, fraudulent chargebacks, including first-party fraud and third-party fraud, account for 45% of chargeback volume globally.

Despite having a lower average chargeback value than merchants operating in the travel and hospitality industry, merchants in gaming, cryptocurrency and gambling experience a higher rate of fraudulent chargebacks at 52%, and 11% of these chargebacks are written off.

Due to the increase in customers’ ability to dispute a transaction through digital channels, as well as the emergence of bad actors intentionally misusing the dispute process, fraudulent chargebacks are increasingly having an impact on merchants’ and issuers profit margins.

How issuers and merchants manage chargebacks

The increase in chargeback volume also means that both issuers and merchants must dedicate an ever-increasing amount of resources to chargeback management, putting a further strain on their bottom line. Currently, financial institutions (FIs) in the U.S. employ on average more than 200 back-office staff for chargeback management, with one full-time employee dedicated to every $13k to $14k in annual incoming cardholder disputes.

These chargeback teams play an important role: the limited data gathering in chargeback disputes require FIs to research the case in more depth before it can be resolved. While countries like Brazil are turning customers towards digital channels to submit disputes, research shows that this leads to a 30% to 40% increase in dispute volumes.

Merchants, on the other hand, are using both in-house and third-party channels to handle chargebacks. Mid-market companies are more likely to lean on outsourcing than large enterprises, which have bigger budgets to dedicate to in-house dispute management.

Regardless of size, all merchants are investing more heavily in technology that can help in handling the dispute process and chargeback management overall. Around 1 in 8 large enterprises report that their technology costs in the area have increased by more than 25%, and 15% of mid-market companies report cost increases of up to 24%.

How merchants and issuers can build effective chargeback management infrastructure

Merchants and issuers face a greater volume of chargebacks and an increase in management costs. Firms should turn towards prevention mechanisms, including AI-driven review processes, to cut down on the resource-intensiveness of chargeback management.

Strategies like real-time alerts from an FI can allow merchants to act swiftly to refund a customer’s order or cancel it altogether, preventing the dispute from escalating to a chargeback.

But issuers can help take this process even further: digital tools that can help customers identify their transaction more accurately, as well as subscription management tools embedded in the banking app, can empower customers to stay on top of their spend and not turn so quickly to disputes.

Technology is also making it possible for FIs to better identify fraudulent transactions, increasing the rate at which first-party fraud is identified and handled. As innovative digital payments continue to increase, these strategies can ensure that merchants and issuers are not dedicating an inordinate amount of resources to chargeback management, without compromising product delivery and customer experience.

To get a deeper breakdown of how chargebacks are impacting merchants and issuers around the globe and what strategies these firms are using to safeguard their bottom lines, download this report from Mastercard.

Tag: digital payments

Inside Mastercard’s push to move LATAM’s small retailers beyond cash