PCM vol. 3 issue 7

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Thought Leaders Corner To go big in Latin America, you better understand local payment methods by Andre Allain For businesses looking to expand globally, Latin America must be a target market. The region is growing, society is ascending in economic power, and therefore avid to consume. Besides being the biggest country in Latin America, Brazil also dominates the cross-border market, followed by Mexico. Another country who is getting a lot of attention lately, Chile is receiving investments from China and within the next months will gain a branch of Bank of China, one of the four largest banks of the Asian Country, according to the Chilean newspaper La Tercera. An expanding middle class with an increasingly sophisticated taste Today Latin America is home to 600 million people. Almost one-third of it is formed by the middle class, people with an income of 4 to 50 dollars a day. This group has doubled in size during the last decade, according to a study released in 2016 by the Inter-American Development Bank about the social conditions in Latin America and the Caribbean. This new middle class is an avid user of the internet, its consumption needs keep increasing in sophistication and remain unsatisfied by the local supply of goods and services, hence, turning to a more diverse global supply of goods and services via e-commerce. But these almost 200 million Latin Americans are not being served well enough when it comes to e-commerce. They want to buy from abroad but face the reality of a lack of payment options. The consumer has the eager and the money to buy, but can’t complete the purchase simply because the merchant does not accept the payment method that he or she is used to working with. Just like any other market, Latin America has its own specificities. The local payment methods are one of them. In order to have a successful entering and good penetration in the region, it is necessary to offer these local methods. You can’t access the whole Latin American market with just international acquirers. But what are these local payment methods? Credit cards are still the preferred payment method in Latin America. However, global merchants should expect a low credit card approval rate in Latin American countries in general. Let’s take a look at some data from Brazil and Mexico, the first and second largest region’s e-commerce markets. In Brazil, this rate is between 30% and 50%. The main cause of this low approval rate is the fact that internationally accepted credit cards (that can process in foreign currency) represent only 19% of the country’s digital payments market. It means that 81% of these Brazilian consumers cannot buy from global merchants if these merchants do not offer local payment methods. Local payment methods are local credit 8
Thought Leaders Corner Andre Allain Head of Enterprise Sales at EBANX Andre is the head of Enterprise Sales at EBANX, leading the team through the expansion of EBANX current enterprise merchant base to Latin America and to add new enterprise merchants, helping businesses to overcome local barriers and reach the full potential of consumption in the region. He holds a Master of Business Administration from the University of Melbourne and has been working on the e-commerce and payments market for the last 10 years. cards (that only process BRL) such as Elo, Hipercard, local Visa, and local MasterCard, debit cards, bank transfer, and cash payments. A very well-known and familiar Brazilian cash payment method is the Boleto Bancário, or boleto for short. Millions of Brazilians are used to pay utility bills like water, electricity, rent, among others, with it. They are used to it and more important, they trust in it. One of the main reasons Brazilians prefer to pay using Boleto Bancário is the transparency of it. All the information needed is in one document, which includes the exact amount the customer will have to pay and by when, the barcode, corresponding serial number (that allows to pay it by using internet banking), issuing bank code, customer information, and description. The capillarity is another reason since the boleto can be paid in more than 64K different locations around the country such as supermarkets, lottery stores, and banks. Another common payment method in Brazil is bank transfer, or Electronic Funds Transfer. This method allows the consumer to pay by using its own online bank account, by being redirected to its bank website. In Mexico, for each credit card, there are 5 debit cards. OXXO, a cash payment alternative holds a 30% Mexican market share of online shopping. It is powered by the OXXO convenience stores chain. Like the Boleto Bancário in Brazil, OXXO is an extremely popular cash payment method in which Mexicans trust. They are used to it and can pay it in any one of the 14K OXXO convenience stores around the country. Besides Brazil and Mexico, e-commerce in Colombia is booming in the last three years (growth of 50% since 2013 to 2016, according to American Market Intelligence), Colombians are increasingly buying from online stores and also looking for products and services provided by global merchants. As the numbers show, Latin American nations are growing fast as well as embracing the internet, social media, and e-commerce with open arms. But it is still a market that has very specific characteristics and needs. It is important for global merchants to trust and use partners that have: proven track record of success, understand the local culture, what does and doesn’t work and knows the behavior of local consumers. Latin America is a market to be unlocked. EBANX EBANX is a Brazilian Fintech that offers Latin American local payment methods to global businesses. The company provides solutions for merchants such as AliExpress, Airbnb, Spotify, Wish, and Udacity. EBANX is changing the way consumers in Brazil, Mexico, Colombia, Chile, and Peru pay on international websites and has already enabled more than 21 million people in these countries to access global products and services, as well as enabling global e-commerces to reach new audiences. Along these, there are the interest-free installments, or Meses Sin Intereses, a widely popular method in the country. A study released by AMIPCI (the Mexican Internet Association) indicates that 6 out of 10 e-commerce buyers would prefer to make an online purchase that offers interest-free installments, over a discount or free shipping. 9
Page 1 and 2: Vol 3. Issue 7 | July 2017 YOUR GAT
Page 3 and 4: Contents STORIES Amir Abdin Founder
Page 5 and 6: Thought Leaders Corner Barry McCart
Page 7: LOOKING FOR A JOB? THERE’S NO BET
Page 11 and 12: Thought Leaders Corner Omni-channel
Page 13: Thought Leaders Corner payment acce
Page 16 and 17: expert interview institutions alrea
Page 18 and 19: startup spotlight “AN IN-STORE PO
Page 20 and 21: Payment Collective To get a more co
Page 22 and 23: Payment collective Unlocking potent
Page 24 and 25: Hot jobs Hot Jobs CORPORATE SALES M
Page 26 and 27: Payments & Cards Network Driving In

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