The rise of the connected economy has opened up trade avenues – where, using everything from cellphones and tablets to cars, consumers can transact in more ways than ever before.
And they can transact in more places than ever before. With all of this connectivity comes the ability to engage in cross-border trade.
Erika Daguani, vice president of products on the payment platform EBANXLatin America is an attractive market for all kinds of businesses, told PYMNTS in an interview. But there is no one-size-fits-all approach for the region, and success depends on meeting consumers where they want to pay and how they want to pay.
With a few stats, we can see the allure. More than 90% of Chilean consumers now have access to at least one device connected to the Internet, compared to 75% in Colombia and 60% in Peru.
The conversation took place against a backdrop where credit and debit cards are increasingly used for digital purchases in Latin America, accounting for 70% of e-commerce purchases last year, she said. , which makes it the main method of payment. But dig a little deeper and local credit cards made up a third of all e-commerce transactions in Latin America in 2021.
With these local cards in hand – not international ones – significant percentages of consumers might otherwise be prevented from fully exploiting the potential of e-commerce, as these cards will not work universally. In Brazil, for example, only 20% of individuals have international cards.
Address pain points
This has led to a number of pain points in an environment where, as Daguani said, “the key to doing cross-border… is to provide access” to new markets. This access works both ways, for consumers and businesses alike.
At a high level, she said, it doesn’t matter where a consumer is when they make an online purchase – or what type of card they have in hand.
To this end, the company allows international companies to enter Latin America by offering local payment methods. This allows merchants to expand their customer base and gives customers access to a plethora of products and services that would otherwise have been out of reach.
Take Brazil, for example, where Boleto (formerly known as Bancario Boleto), a ticket-based payment method that works through barcodes, is very popular with unbanked consumers. This payment method now accounts for 10% of e-commerce in Latin America’s largest economy, Daguani said.
But she said Boleto can present a challenge for traders new to the market to understand, let alone integrate. By providing a single point of access to these businesses, EBANX can streamline the go-to-market process while still providing a way for Brazilian consumers to buy online or offline or subscribe to a streaming service. .
Daguani noted that buy now, pay later (BNPL) – relatively new elsewhere – is firmly entrenched in countries like Brazil and Argentina. Consumers in these countries are well accustomed to paying for all kinds of transactions over time, spanning 12 months or more. BNPL “makes sense” for credit and debit card transactions, she said – especially as the card rails are “ready” for BNPL and the growing wave of cardless transactions (CNP) .
Digital wallets are also gaining ground in the region, Daguani said, with double-digit annual growth.
“At the end of the day, whoever chooses the right payment method will be the end user,” she told PYMNTS.
Regardless of the payment method chosen, consumer confidence is a particularly critical factor. She noted that Brazil is relatively further along the adoption curve for open banking than one might see elsewhere, and consumers are generally willing to share their contact details with third-party providers.
“Consumers must trust their financial institution to provide them with their information in order to access new loans or even do business with other banks,” she said.
Going forward, she told PYMNTS, “using whatever payment method you have in hand is key. [to eCommerce] and is quite important. It is a game-changer for Latin America and for the whole world.