Payments: Dealing with fragmentation in LATAM
By Alain Delcourt, Managing Director at BoaCompra
Before working in the payment industry, I had no clear idea about how a payment setup could enhance or destroy an online business. After all, the payment process looks pretty binary: you just need to make sure you accept orders from genuine customers, reject the fraudsters and you are all set, right? Wrong.
Every online store owner has experienced that the payment integration process brings a lot of complex questions to the table. Success or failure on the payment side is defined by a full set of parameters that must be carefully supervised. A skilled sales team and a great product aren’t enough to increase sales in all territories. Even for developed countries with a steady economy and great infrastructure, many questions should be addressed before you start doing business.
- Which UX experience will optimize conversion?
- How recurring / management-based transactions are supposed to work?
- How to minimize downtimes?
- How to easily integrate your payment partner’s capacities?
- Which certifications are required?
- Which risk system is best for your market?
- How to recover sales from declined transactions?
- How shall the pre-authorization/ capture process work?
- What settlement term to expect?
- How to reconciliate payments?
- How do I connect payment data to my ERP (Enterprise Resource Planning)?
- How must data be stored?
- How to manage chargebacks and refunds?
Once your online business grows, there is a point where it feels natural to expand and find customers in new territories. Latin America and its emerging markets are full of potential, but also specific in many regards when it comes to payment: low penetration of international cards, not stabilized economies, foreign exchange volatility, popularity of cash and local payments raise a new set of questions:
- Why are local payments effective when compared to international ones?
- How to aggregate all cash-based payment methods in the region?
- How to successfully extract cash from such complex countries in full compliance with local regulation?
- Which foreign exchange rate (FX rates) applies in countries with unclear official quotations?
- How to deal with payment in installments?
- How to make sure that your local payment partner is financially resilient?
- How to guarantee the continuity of the business?
Payments are an integration game, which can be a very complex one in Latin America. As very few players are flexible and resilient enough to address all these questions in all territories of the region, the LATAM payment industry remains very fragmented. Many merchants end up working with multi-layered payment architecture involving a lot of local intermediaries to boost sales.
Understanding each market, respecting online shoppers’ preferences and setting up partnerships with trustworthy companies in each country are some of our missions in the LATAM online market. Local payment solutions for each international merchant, customized for a simple and fast integration is part of BoaCompra’s approach. The company has verticalized the payment chain, being at the same time: a payment processor, a payment aggregator, a credit card acquirer and a cross-border remittance agent. We also believe that 24x7 customer support with native speakers is a must-have for many merchants.
A simple integration that respects each country’s regulations, with security protocols, and solutions of cash management flow between buyer and seller brings a lot of leverage when it comes to performance and costs.