In Latin America, credit cards are not the only way to pay online, and alternative payment methods are meeting the consumer’s demand for purchase in their local currency and with their desired and trusted method. International merchants must offer a wider range of local payments as possible at the checkout to ensure the best payment conversions.
As far as Colombia is concerned, there are five most popular local payments for e-commerce listed below:
Regarding e-commerce, this omnichannel company provides both merchants and consumers with a payment option:
- An extensive coverage that allows consumers to perform their operations quickly and safely;
- Allows online purchases without exposing bank account or debit/credit card;
- Allows online purchases to those without access to payment methods, debit/credit cards, and virtual payments.
- Offers secure online purchases, avoiding possible fraud associated with other means of payment.
How does it work? When a customer chooses Efecty at the checkout point and confirms the purchase, a PIN is issued with which the customer can later pay in cash, in Colombian pesos, in any of Efecty’s service points.
2. Via Baloto
Via Baloto is an offline cash payment voucher associated with several banking institutions. With a massive coverage of 13500 terminals located in more than 1100 municipalities nationwide, Via Baloto achieves the feat of reaching about 96% of the Colombian population.
No wonder it’s a very popular payment option in Colombia, serving both merchants and consumers:
- Closeness and convenience;
- Efficiency and agility;
- Security and reliability.
How does it work? During the checkout, the customer chooses Via Baloto, and a voucher is generated. Then, the customer takes it to any of the nationwide points of Via Baloto and proceeds with the payment.
Gana is a payment service brand developed by Grupo Reditos, a business holding company. It provides payment methods for consumers and merchants, such as money orders, top-ups, collections, and payments through credit cards, bank transfers or cash, insurance, and games, among others.
Unlike the others listed, Gana operates only in Antioquia, one of the country’s 32 departments, having a coverage of 125 municipalities.
4. Pagos Seguros en linea (PSE)
PSE stands for Pagos Seguros en Línea, and it means safe online payments. Provided by ACH Colombia, it’s a payment option that allows paying with a bank account. It consists of a direct debit from the buyer’s account to the merchant’s account that runs on multiple deposits throughout the day. PSE is one of the most popular methods, with 52.29% of all e-commerce payments in 2017. What appeals the most to consumers is the ease of use and its security (47% of Colombians do not trust online payment).
5. Visa and Mastercard (local credit cards with installments)
Credit and debit cards are one of the most common and popular ways for Colombians to make purchases online. However, the ownership rate is only 13.9%. And despite being the preferred payment method, its usage is associated with the installments option – in fact, 70% of these payments are carried out through installments.
Key topics of the Colombian economy
As Colombia is one of the LATAM’s top 6 strong e-commerce markets, it’s important to retain some of the most relevant features of its economy:
- The gross domestic product (GDP) corresponded to USD 333 billion in 2018, which in turn corresponded to an increase of 2.7% versus the previous year; it is projected to grow 3.6% in 2019;
- The country is now a full member of the OECD, having been invited, in May 2018, to become the 37th member of the organization;
- 49.7 million inhabitants (as of January 2019);
- 68% internet penetration rate, corresponding to around 34 million internet users;
- USD 6 billion e-commerce revenues sales in 2018, and it’s estimated to reach USD 8 billion in 2022.
Partnering with a local payment expert
In a fragmented region such as Latin America, each e-market has its nuances and its challenges. Thus, it’s recommended for merchants to endeavor in a partnership with a local expert, such as BoaCompra, to help them to deal with the process of checkout optimization and the integration of local payments, as well as with legal and compliance matters.