If you’re in the payments industry, chances are you’ve either thought about or are attempting to make in-roads into the Latin American payments market.
If not, you should be.
Latin America (LATAM) is one of the last frontiers in the world of payments and (arguably) the region with the most potential. In the past, Instabill has reported on countries and regions that offer unique possibilities in payments, such as the BRIC nations (Brazil, Russia, India and China) and Southeast Asia.
The seminar titled Understanding the Latin American Payments Landscape drew a full room at the Transact 16 tradeshow and conference (April 19-21 at the Mandalay Bay Las Vegas) for good reason: It was symbolic of the region’s earning potential.
One Trait About the Latin American Payments Market – and What to Do About it
Latin American consumers and businesses are fiercely loyal to local banks and credit card schemes. Acquirers such as Redecard, Cielo and Getnet own the lion’s share while international brands such as FirstData and Elevon own a small percentage of the market.
The same is true for issuing banks: Banco Itau, Banco de Brasil and Bradesco are the most popular issuers while Santander is among a handful of well-known international banks that fight for the remainder of the market.
Therefore, the key to breaking into the Latin American payments market is to partner with one of the local solutions.
5 Reasons to Explore the LATAM payments market
- Mobile Commerce: The potential for mobile e-commerce is massive: More Latin American citizens own mobile phones than in the U.S.
- E-Commerce is Growing: Card-not-present transactions totaled $51 billion in 2013 and are projected to nearly double by the end of 2017 to $84 billion.
- Cash is Still (kind of) King: In Mexico, credit and debit cards are the preferred payment method in 43 percent of CNP transactions while cash is still relevant at 32 percent. Surprisingly, installment payments are very popular for CNP purchases, to the tune of 55 percent.
- Underbanked: LATAM countries become more electronic, but 60 percent of citizens do not have bank accounts.
- Colombia: While Brazil is the driving force of the Latin American payments market, Colombia is a distant second and, according to the panelists at the seminar, the easiest country to penetrate. Colombian e-commerce is expected to triple that of neighboring Chile within three years.
What to Watch for in LATAM
Latin America is huge and each country has its own unique schemes and operations. While the earning potential is obvious, there are pitfalls within the LATAM payments scheme that payment professionals need to realize. For example:
- A cardholder in Brazil has one year to file a chargeback (in the U.S., for example, it’s six months).
- In Colombia, debit cards are prevalent. Credit cards? Not so much. Credit cards are difficult to obtain, understandably, without solid income.
- Mexico has one of the highest fraud rates in Latin America.
When Instabill attends tradeshows, such as the CNP Expo next week in Orlando, we are always on the lookout for new partners to join our revenue sharing program. Instabill offers 60 and 70 percent revenue shares for referrals and applications that lead to processing transactions.
Get the conversation started at 1-800-318-2713 or select the live chat option to speak directly with a merchant account manager.