When businesses seek fast-growing markets, they often think of Asia. But Latin America is a compelling choice for businesses with the know-how to meet local consumer payment preferences.
Economic volatility and political unrest in countries, like Venezuela, tend to dominate the news, but businesses who look beyond these headlines will find markets experiencing significant ecommerce growth. Brazil (#2), Mexico (#6) and Argentina (#8) are all in the top-10 global markets for total hours spent on the internet. In 2019, Mexico experienced 35% ecommerce sales growth, the fastest of any country. While Columbia and Argentina were both among the fastest-growing ecommerce markets in the world. To seize this opportunity, businesses need to think globally while understanding consumers locally.
Here are Rapyd’s five must-know tips for ecommerce success in Latin America
1. Think outside the card
Credit cards and debit cards aren’t the only solutions or even the most popular ones. 65% of adults in Latin America don’t have a credit card, debit card or bank account, and many of the credit cards that are in use are only authorized for local purchases. To reach consumers across Latin America, it’s important to consider other payment options, including mobile payments, ewallets and regional payment solutions.
2. Understand the voucher system for online cash payments
There are many regional payment solutions throughout Latin America, but the voucher system stands out. A shopper receives an invoice when they make a purchase online. The shopper then prints out that invoice and takes it to a local network agent, such as a convenience store, where they pay in cash. The network confirms the payment with the merchant so they can deliver the goods. Around 20% of total ecommerce purchases in Latin America are paid in cash using a coupon/invoice network, such as Boleto in Brazil and Oxxo in Mexico.
3. Offer installments
Another payment option that’s important to understand in Latin America is the wide-spread use of Installments. They are particularly popular in Brazil, Mexico, Argentina, Chile, and Columbia. Approximately 50% of all ecommerce in Brazil is done via installments, and they enable consumers to make discretionary purchases for things like jewelry, electronics and travel, that they otherwise couldn’t afford.
Installments are authorized and captured for the full amount upon purchase, and the balance is settled over a period of time, with each installment automatically debited every month. Customers pay an up-front fee instead of being charged interest. Sometimes this fee is rolled into the purchase price and consumers are given a “discount” for paying in full.