Merchant Services Business Owner

Publication Date: March 11, 2019

Author: By James Stack, First Data Product Director for Latin America

 

Latin American Markets Are Open for Business.
Are You Ready?

 

For global eCommerce retailers, it’s easy to get excited about the trend in Latin America where more countries are opening their markets and inviting internal and external competition. That movement has its genesis in Latin America’s largest economy, Brazil, which liberalized its markets back in 2010. It’s taken almost a decade but now, we’re seeing other countries start to follow Brazil’s lead.

Still, those eyeing expansion encounter unique challenges along with opportunities across every border. You need a local partner with Latin American experience to give you the best roadmap.

We’ll start with the three biggest and most welcoming Latin American markets – Brazil, Mexico and Argentina.

 

BRAZIL

With a young and socially active population of over 200 million – and even better, open markets – you can see why the Brazil could be the first stop for companies expanding into Latin America. But Brazil is just emerging from a serious 2015-2016 economic downturn that slowed growth and changed patterns of consumption.

Here’s what you need to know:

  • Brazil is Latin America’s #1 eCom market: $30B in volume and growing double-digits.  That growth is coming from all types of products, from travel to digital goods to emerging consumer staple goods, such as beauty products and cosmetics.1 Specialists in these high growth segments will find Brazil especially attractive.
  • Local payments are dominant: from local credit cards like Elo to specialized payment methods such as Boletos, Brazilians use local payment types (such as Boleto, Elo, Hiper) for 1 in 3 online transactions.2
  • Card usage is growing: The downturn scared many customers from acquiring debt. But now, they’re willing to make more purchases again using debit and credit cards. In Q3 2018, card usage grew by almost 15% from the year before.3 Access to the biggest number of card networks will mean the difference between static and accelerated growth.
  • Mobile commerce growth is promising: More than 70% of consumers own a smartphone, but far fewer can load a credit or debit card onto e-wallets like Google Pay™. Recent partnerships with Brazilian banks may prime this underpenetrated opportunity for significant growth.4
  • It’s not easy to start a business: The World Bank 2019 Ease of Doing Business Rankings put Brazil 109th on its list, after Namibia and Papua New Guinea.5 There are myriad reasons why, but what’s important is finding a local partner like First Data to guide you through the complexities of selling in this promising and challenging landscape.

 

The Brazilian market is the largest eCom market with a

number of local payment methods.  Make sure to partner

with a local payments provider that can translate these

payments into a great consumer experience.

 

MEXICO

With the second-largest population in Latin America and a solid middle class, Mexico is promising for companies looking to expand geographically. But the allure of its millennial spending power is offset by the realities of the payments landscape.

  • Bank accounts are scarce: Almost two-thirds of Mexican adults have no access to banking services, and many say their variable income makes bank accounts unnecessary.6 This makes accepting local payments more important than ever.
  • Many online transactions are completed in cash at local shops: With up to 20% of eCommerce transactions completed as cash payments in local stores, it is critical to have cash as a checkout option to maximize checkout conversions.
  • Mobile commerce is growing: Smartphone penetration is climbing – reaching over 45% last year.7 And about half of all consumers make at least one mobile purchase monthly.8 This under penetration across Mexico’s large population points to significant upside yet to come.
  • Online marketplaces are popular: A fast and easy eCommerce solution is to go through one of the established marketplaces that offer a safe and familiar buying experience for shoppers.9 First Data can bring together the partnerships to make your eCommerce hum.

 

Building trust and credibility within the financial

community takes time. The right partner will have local

resources on the ground with years of operating

experience.

 

ARGENTINA

Of Latin America’s three largest economies, Argentina is struggling the hardest to emerge from recession. This year’s forecast will have its challenges, but both imports and private consumption are expected to turn positive by next year, making the market ripe for expansion.

Here are some factors to consider:

  • Opening its markets is a priority: Argentina has seen the progress made by its two biggest neighbors, and it’s taking steps to increase global trade.10 That means this is the most promising time to consider it for expansion. But, make sure you have an experienced partner who can find the smoothest path around changing government regulations.
  • Credit cards are very popular: traditional credit cards represent as much as 7 in 10 online purchases.11 Consumers also use traditional physical payments to buy goods online, such as with Rapipago.
  • MercadoLibre dwarfs Amazon: The online marketplace is the pride of Argentina and a dominant player across Latin America. Half of all online purchases in Latin America use the MercadoLibre platform, compared to 17% for Amazon.12 Global eCommerce merchants considering a slower expansion into the region shouldn’t ignore this regional giant.
  • Currency risk is a watch item: Argentina has suffered from devaluation in the past.

 

You want a processor with a unified API, who can put

you in the middle of markets with limited technology

change. This also helps when it comes time to expand,

letting you move quickly with fewer roadblocks.

 

With thousands of people on the ground in Latin America, First Data is committed to innovative solutions that respond rapidly to any need, any challenge and any opportunity. Through our unified API and pan-regional presence, First Data can get you into the right Latin American markets to take advantage of this growing eCommerce market.

So, say hello… to LATAM expansion.