Payment in Chile Emerging Technologies Analysis

Emerging Technologies

The Chilean payment industry value chain is increasingly being influenced and shaped by several emerging technologies. These technologies, often intertwined with regulatory developments and shifting market dynamics, present both opportunities and challenges across different steps of the value chain.

Open Finance: Driven significantly by Chile's Fintech Law (Law No. 21,521, effective February 2023), Open Finance is a key emerging paradigm that mandates the secure sharing of customer financial data and the initiation of payments through standardized APIs with user consent. This framework aims to foster competition, financial inclusion, and innovation by enabling new participants, such as Payment Initiation Service Providers (PISPs) and Account Information Service Providers (AISPs), to build services on top of existing financial infrastructure. The full implementation of the Open Finance System (OFS) is a phased process, with key milestones for API availability for banks and card issuers expected from July 2026 and full operational capacity targeted by 2026 or 2027.

Artificial Intelligence (AI) and Machine Learning (ML): AI and ML are rapidly becoming critical tools within the payment ecosystem, primarily for enhancing fraud detection and prevention, improving operational efficiency, and potentially personalizing customer experiences. AI algorithms can analyze vast amounts of transaction data in real time to identify unusual patterns and anomalies that may indicate fraudulent activity, reducing both fraud incidence and false positives. Beyond fraud, AI is also being explored for compliance monitoring and automating back-office processes. The increasing sophistication of cyberattacks necessitates continuous investment in AI-driven security solutions.

Buy Now, Pay Later (BNPL): While more of a business model innovation enabled by technology, BNPL is an emerging payment method experiencing rapid growth in Chile. It allows consumers to make purchases and pay in installments, often interest-free. The Chilean BNPL market was valued at USD 651.2 million in 2024 and is projected to grow significantly, reaching approximately USD 2.52 billion by the end of 2030. This growth is driven by evolving consumer preferences for flexible payment options, particularly in e-commerce, and is attracting both specialized providers and the attention of traditional financial institutions.

Digital Wallets and Mobile Payments: Digital wallets and mobile payment applications continue their rapid adoption trajectory in Chile, becoming central to both online and in-store transactions. Enabled by increasing smartphone penetration and improving mobile connectivity (including 5G), these technologies offer convenience and integrated experiences. Digital wallets facilitate various payment methods, including linking cards and bank accounts, and are increasingly incorporating features like P2P transfers and bill payments. Their growth is a global trend reflected strongly in the Chilean market.

Real-Time Payments (RTP) / Account-to-Account (A2A) Payments: The push towards faster and more direct payment methods is driving the adoption of RTP and A2A payments in Chile. Enabled by underlying infrastructure improvements and the Open Finance framework, A2A payments allow funds to be transferred directly between bank accounts, often bypassing traditional card networks. This offers the potential for lower transaction costs for merchants and faster settlement. While systems like Brazil's Pix highlight the potential scale of instant payments in the region, Chile's implementation is closely linked to the development of its Open Finance infrastructure.

Blockchain and Distributed Ledger Technology (DLT): The Fintech Law in Chile recognizes the use of crypto assets as means of payment, particularly stablecoins whose value is determinable and backed by money. While not yet a mainstream technology for everyday retail payments in Chile, blockchain and DLT have the potential for impacting cross-border payments, settlement, and creating new types of digital assets and payment instruments in the longer term. Regulatory frameworks are being developed to oversee these activities.

Here is a table outlining the potential impact of these emerging technologies on the value chain and the associated industry opportunities and challenges:

Emerging Technology	Potential Value Chain Impact	Industry Opportunities	Industry Challenges
Open Finance	All Steps: Enables data sharing and payment initiation across the chain. Payment Initiation: Facilitates PISP-led A2A payments. Processing: Drives API-based data and transaction flow. Acceptance & Wallets: Creates opportunities for new payment methods and integrated financial services.	Develop new A2A payment products, data-driven insights for merchants/consumers, personalized financial services, increased competition and efficiency, fostering financial inclusion.	Significant investment in API infrastructure development and maintenance, ensuring data security and privacy compliance, managing complex regulatory requirements, achieving interoperability across diverse players, incumbent adaptation to new competitive landscape.
Artificial Intelligence (AI) & Machine Learning (ML)	Authentication & Authorization: Enhanced fraud detection and prevention, improved risk scoring, reduced false positives. Processing: Automation of tasks, improved efficiency. Customer Experience: Personalization of services.	Develop and offer advanced fraud prevention solutions, improve operational efficiency and reduce costs, create more personalized and secure payment experiences, gain deeper insights from transaction data.	Access to skilled AI/ML professionals, significant investment in technology and data infrastructure, ensuring ethical AI usage and avoiding bias, adapting to rapidly evolving fraud tactics, regulatory considerations around AI deployment.
Buy Now, Pay Later (BNPL)	Payment Initiation: Offers consumers a new payment option at checkout. Acceptance & Wallets: Merchants can offer flexible payment terms, potentially increasing sales conversion and average order value. Clearing & Settlement: Requires specific settlement processes and risk management for installment payments.	Capture market share in a high-growth segment, attract new customer segments (especially younger demographics), increase merchant sales, develop partnerships with retailers.	Managing credit risk and defaults, potential regulatory scrutiny regarding consumer protection and lending practices, intense competition among providers, ensuring seamless integration into merchant checkout flows.
Digital Wallets & Mobile Payments	Payment Initiation: Primary channel for initiating digital payments. Acceptance & Wallets: Increased demand for merchants to accept digital wallets. Processing: Requires seamless integration with underlying payment infrastructure and networks.	Cater to increasing consumer preference for mobile-first payments, expand financial inclusion by reaching unbanked/underbanked populations, offer integrated value-added services (loyalty, offers), facilitate P2P and bill payments.	Ensuring interoperability between different wallet providers and acceptance points, managing security risks associated with mobile devices, adapting to evolving mobile technology and operating systems, user adoption and digital literacy challenges.
Real-Time Payments (RTP) / Account-to-Account (A2A) Payments	Payment Initiation: Enables instant transfers directly from bank accounts. Processing: Requires immediate processing and routing capabilities. Clearing & Settlement: Facilitates real-time gross settlement or faster netting cycles.	Offer faster and potentially lower-cost payment options for consumers and merchants, enable new use cases requiring immediate fund availability, increase efficiency in interbank transactions.	Building and maintaining robust infrastructure for real-time processing and settlement, ensuring interoperability between participating institutions, managing liquidity risk for instant settlements, adapting existing systems.
Blockchain & Distributed Ledger Technology (DLT)	Processing: Potential for faster and more transparent transaction processing. Clearing & Settlement: Could enable near-instantaneous settlement (especially for cross-border). Infrastructure & Networks: Forms the basis for new decentralized networks and digital currencies.	Explore new models for cross-border payments, develop tokenized assets and stablecoins as payment instruments, enhance transparency and efficiency in specific transaction flows (e.g., trade finance).	Regulatory uncertainty and the need for clear frameworks, scalability challenges for high-volume retail payments, energy consumption concerns (for some blockchain types), ensuring security and immutability, public understanding and adoption.

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