In LATAM, providing alternative payments at the checkout to match the current demand is the secret formula to convert consumers into customers and to boost e-commerce.
The global payment landscape is becoming more diverse as alternative payments gain ground. Considering the scope of this worldwide trend, it’ is expected that by the end of 2019, alternative payment methods will reach 55% of the global e-commerce payments. Demand, convenience and innovative checkout technology are the main drivers to the growth of the alternative payments.
Inputs from Latin America are contributing to this big picture and the usage of alternative payment solutions is increasing.
Understanding Alternative Payments
Alternative payment methods (APMs) are payment methods that are used as a substitute of traditional card payments. These third-party payment brands use the traditional payment systems to settle transactions and are typically used in an e-commerce environment.
Why Are APMs Being Increasingly Used in LATAM?
The appearance of new technologies – such as the smartphone – and their widespread use, hand in hand with changes in consumers`expectations, has led to new market participants (i.e., e-wallets and neobanks). In a region with a rate of around 70% of unbanked population, such as Latin America and the Caribbean, these factors are key to leveraging alternative payments usage:
Altogether, they bring companies closer to the consumers’ expectations by empowering people to pay in such a way that fits their needs and lifestyle.
The Alternative Payments Scenario in LATAM
Think globally, act locally fits perfectly to the fragmented Latin American region, where each e-commerce market has its own set of needs and particularities. Step number one is to be tuned with local and alternative payment preferences and to make them available on the online checkout process.
Credit cards are no longer the only way to pay online and APMs will provide more options at checkout, thus allowing customers to purchase goods and services in their local currency and with their desired and trusted payment method.
What Online Payments LATAM Consumers Prefer?
Across Latin America, credit cards are still one of the preferred online payment methods, but APMs such as e-wallets are becoming increasingly popular:
However, when analyzing each one of the markets, consumers have different preferences:
Why APMs Leverage E–Commerce
One of the most significant advantages of e-commerce is that it relies on digital technology, enabling companies and brands to reach a larger and more accurate audience. And if e-commerce businesses have overcome geographical and temporal barriers – they are open 24/7 – now the challenge is to engage and build customer loyalty.
Mix Payment Methods to Convert Leads
As their e-commerce platforms integrate more payment options at the checkout, merchants are not only converting leads from regular online shoppers, but also from new potential customers.
To do so – and to match the consumers’ expectations – international merchants must deal with some challenges which are common in all LATAM markets:
- Online payment security.
- Local payment solutions and alternative payments.
- Internet infrastructures.
- Local finance policies and bureaucracy.
- Cultural preferences and local traditions.
Partner with a Local Expert to Master APMs in LATAM
The specificity of the Latin American market requires international merchants to analyze opportunities and challenges. To this end, it is suggested that they partner with a local expert, such as BoaCompra, since it is a market which must deal with consumers`lack of trust in the banking system and in payment systems.