Why payment localization is essential for selling in Latin America
Huge volume of e-commerce sales, booming digitization, engaged customer base: selling in Latin America (LATAM) offers many opportunities for foreign merchants who want to tap into this growing region. However, in order to get the most out of the LATAM market, it is fundamental to implement strategies that help adapt your business to the region, such as localizing payments.
Payment localization refers to the process of adapting your entire payment experience to the needs of a region other than your own – in this case, Latin America. It goes far beyond simply accepting cross-border payments, as we will see in this article: localization requires a complete overhaul of your process. Do not worry; with the right strategies, it’s complex, but nothing impossible or too expensive.
So let’s take a look at why – and how – to successfully implement payment localization to sell in Latin America.
Offer local payment methods
Local payment methods are the basis for localizing payments. This is a fundamental aspect for companies that want to succeed and achieve high turnover in LATAM, since local methods are the most commonly used in the countries of the region.
Companies selling to LATAM but only offering international credit cards as payment methods would engage an extremely small number of Latin American consumers. The highest volumes and growth rates come from local payment methods rarely seen on the global stage, such as domestic-only credit and debit cards, localized cash payment options, local digital wallets and, of course, sure, the main instant payment phenomenon in Brazil – Pix.
In a soon-to-be-released BoaCompra by PagSeguro study, market data shows that domestic credit cards accounted for 33% of total e-commerce sales volume in 2021, and are expected to reach a 37% market share. by 2024. Meanwhile, now at 23%, international credit cards will drop to 22% by 2024. In total, 78% of all LATAM e-commerce sales were paid with local payment methods in 2021.
These numbers underscore the importance of foreign merchants offering local payment methods if the goal is to successfully grow your business in Latin America. By partnering with a local payment company, you ensure more payment options with a single integration and a smoother settlement process, without the need to open a local entity in the target country. This is essential if you want to provide a truly localized payment experience to your customers.
Billing in local currency
Payment localization is all about creating an experience tailored to a specific audience. For Latin Americans, paying for cross-border sales in local currency is not just about agility and clarity, but also about enhanced financial security.
Indeed, LATAM’s local currencies, such as the Brazilian real and the Argentinian peso, have historically been very fluctuating and devalued against the dollar or the euro, for example. Thus, when a Latin American customer makes a purchase priced in dollars, there is a good chance that the final total amount will increase between the date of purchase and the closing date of the credit card billing statement. credit.
Latin Americans are very wary of currency fluctuations. So by invoicing directly in the local currency, the customer knows exactly how much they are paying, which increases conversion rates.
Establish processes for the region given the high number of frauds
Localizing payments not only provides a better customer experience, but also significantly boosts business efficiency. Processing payments locally increases transaction approval rates, speeds up processes, and makes the entire payment stage much more agile and secure – for the customer and for the business.
Additionally, local payment partners have the expertise to handle specific and more accurate risk analyzes to avoid the high levels of fraud attempts in the region. With knowledge of local customer behavior and local data offices, better strategies and processes can be put in place to ensure risk prevention.
Provide customer support beyond payments
It’s also about localizing the entire shopping experience, not just payments. Providing customer support to Latin American customers poses many challenges: the language, culture, and even time zones are very different from those in your home country.
So having customer service specialists who can speak Spanish and Portuguese is a must if you are selling in Latin America. Even better, if they are native speakers, then you will be better prepared to support customers from all LATAM countries, not only in terms of language, but also culture.
Understand the local clientele
It is true that due to the pandemic, domestic e-commerce has reached unprecedented heights in Latin America, growing 121% between 2019 and 2020. While cross-border sales have fallen during this period, now that the worst of the pandemic is over, BoaCompra research shows that cross-border e-commerce is on the verge of a very successful recovery and, as of now, growing by at least 27% per year.
After all, Latin American consumers are always looking for innovative shopping experiences, competitive prices and a wide variety of products. Understanding this is fundamental to scaling your business in the region, as it impacts everything from product selection to checkout, Latin American consumers need agility, innovation and transparency. . As we have seen, payment localization is a must if your business wants to offer this for LATAM.
About Peter Elfgren
Peter Elfgren is Head of Account Management at BoaCompra by PagSeguro. He applies all his vast experience in payments, products and business to BoaCompra’s account management team, providing the best strategic, technological and operational advice to all merchants.
About BoaCompra by PagSeguro
With more than 17 years of experience, BoaCompra by PagSeguro is a local payment platform that allows merchants around the world to access Latin America by accepting more than 140 payment methods in local currency, without the need for a local entity. It also allows single/bulk payments to Brazilians in local currency instantly, without bank fees. BoaCompra is part of PagSeguro, a disruptive fintech company powered by strong and consolidated infrastructure and capital.