HomePayment MethodsThe Payment Flow When Handling Cross-Border Payments in Latin America

The Payment Flow When Handling Cross-Border Payments in Latin America

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Think of cross-border payments as an hourglass in which the top half is all businesses around the globe. That new budget CRM, all niche marketplaces, an OTA catering to newlyweds or focusing on single travelers, all online learning platforms, all SAAS aiming at small SMBs, there is no limitation to a specific vertical or business category.

Now think of the bottom half as all Latin American countries whose citizens would benefit from having access to these products or services. Brazil, Mexico, Colombia, Chile, Argentina, and Peru are the primary economies and represent about 90% of the estimated 95 billion dollar total e-commerce market, according to Statista.

Suppose you are an online business owner and relate to the above. In that case, the narrow neck connecting the bottom bulb to the top bulb represents all the card issuer restrictions and constant changes in the regulatory framework, foreign exchange, fraud systems, financial logistics, and banking technologies. In other words, your company’s reach by internet users in those countries is being capped by a plethora of external factors that are not in your control.

With all that said, cross-border payments can turn that bottleneck into a rich “payment pipe,” allowing shoppers to pay for your product or service in their own currency through a local legal entity. If you don’t think that it is important, imagine finding a product that you really want, with a website in your native language and a price estimate in your country’s currency, only to find out at checkout that you will be charged in Paraguayan Guaraní. Sucks, doesn’t it?

Now imagine you’re a startup that has received seed funding and has its customer base and operations growing in the US, but still plans to raise capital through series A, B, and C funding rounds. It is important to demonstrate that the business you developed will generate long-term profits. At this stage, companies are often not entirely sure how to monetize their businesses and often end up missing the opportunity to explore non-English speaking countries because they think it’s too early.

Remember… the top six countries in Latin America spend 95 billion dollars per year buying abroad; you don’t want to miss the opportunity! Silicon Valley companies often start searching for a regionalized price solution once they have reached revenue levels of 20 million dollars per year in a country like Brazil, for instance. It typically happens after losing their biggest client in the country to a competitor that can charge their company in BRL.

Marketplaces like eBay, Amazon, Aliexpress, Gearbest, and Wish.com increased their revenues significantly after adopting regional pricing and offering alternative payment methods and domestic credit cards in the countries where they operate in LATAM. Offering payments in BRL doesn’t stop at consumer products; it extends to digital products, such as Spotify, Netflix, and Disney +, as well as SAAS, such as SalesForce and Oracle database products.  

If your company has the IT resources to integrate to a cross-border payment provider at an early stage and your marketing team is prepared to advertise to LATAM countries, you will reap the benefits of seeing your brand slowly but surely become known in those countries in which you optimize the payment process.

For more information on optimizing the payment experience for international buyers, improving acceptance rates, and making cross-border transactions seamless, I’m available via direct message.

Alexandre Pereira
Driving Payment Success with Banks, Acquirers and Card Schemes 🏦💳 | Payments Strategy ♜💡 | Global Cross-Border Payments Expert 🌎 | Payment Partnerships 🤝 | Payment Consulting 📋🎯


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