How international e-commerce is upending Latin American payments

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Latin America’s fast-growing e-commerce industry is providing opportunities to provide payments gateways for cross-border transactions originating in countries that don't favor digital or credit card payments.

Latin America is characterized by a high number of consumers without credit cards or bank accounts, and a prevalence of domestic-only alternative payment methods such as Brazil’s Boleto Bancário, a voucher containing a barcoded invoice to be paid with cash at convenience stores and bank branches.

Curitiba, Brazil-based Ebanx targets cross-border e-commerce, with a focus on Latin America. It provides e-payment methods for consumers to make purchases from international merchants using domestic-only debit or credit cards, bank transfers, vouchers or digital wallets. Its solutions are used by consumers and merchants in Brazil, Mexico, Argentina, Colombia, Chile, Peru, and Ecuador, plus Asian, U.S., U.K., Canadian and European merchants selling to Latin America.

“Ebanx was founded in 2012 to bridge a gap between Brazilians and global merchants,” said CFO Wagner Ruiz. “E-commerce was starting to boom in Brazil, but international e-commerce was still just a dream for many Brazilians. They often didn't have ways to pay online, as the only option was to use an international credit card, enabled for international purchases.”

Only around 19 percent of Brazilians have used an international-enabled credit card, while around 30 percent of all Brazilian e-commerce purchases are made with Boleto Bancário, Ebanx estimates.

In Brazil, credit cards account for 70 percent of Ebanx transactions, compared to 25 percent for Boleto Bancário and 5 percent for debit card solutions, following the average for the overall Brazilian e-commerce market.

“This trend repeats itself across Latin America,” said Ruiz. “In all the countries where Ebanx has operations, we see 70 percent of transactions on credit cards and 30 percent through cash payments and debit card.”

Bridging the gap
“Our original goal was to bridge the gap by enabling foreign merchants to accept local Brazilian payment services,” said Ruiz. “Then we extended our solution to other Latin American markets, as they faced the same payment challenges for international e-commerce as Brazil.”

Besides offering local Latin American payment solutions to global e-commerce merchants from China, the U.S. and Europe who want to sell in Latin America, Ebanx serves Latin American merchants wanting to increase their cross-border revenue throughout the region.

“This means, for example, that Brazilian e-commerce stores wanting to accept Mexican local payments from Mexican customers can use Ebanx solutions,” said Ruiz.

Ebanx declined to comment on specific plans to offer its service to consumers outside Latin America.

“Currently, Ebanx’s expansion plans are mainly focused on widening our operations, so we can offer more local payment solutions from more Latin American countries,” said Ruiz. “We believe the region still has much room to grow, with a huge e-commerce potential.”

In 2017, Ebanx launched the Conta (Account) Ebanx, a digital wallet used to track all Ebanx payments and refunds, and make purchases via a prepaid virtual card. “The Ebanx Account enables Latin American consumers to monitor their purchases on websites that are Ebanx merchants,” said Ruiz. “With the Ebanx Account, consumers can easily see where they bought something, and how much they spent.”

The success of Alibaba and AliExpress have led to a major boom in Chinese merchants selling online abroad.

“Ebanx helps Chinese merchants who want to sell to Latin America,” said Ruiz. “Currently, some of our biggest merchant clients are Chinese, e.g. AliExpress and Light in The Box. We’re contributing to both the development of the Latin American region and of these merchants’ trade with the region, by enabling Latin Americans to buy from the other side of the world with payment methods they are used to.”

Last year, Ebanx processed $1.2 billion in cross-border transactions for 500 merchants, and currently serves 40 million Latin American consumers. The company experienced an 80 percent average annual growth rate in all verticals served over the last three years. In January 2018, Ebanx raised $30 million from FTV Capital and Endeavor Catalyst Fund.

In 2013, Ebanx started processing for AliExpress, and has since won Brazilian contracts from AirBnB, Wish, Light in the Box, and Spotify.

To serve Chinese merchants hosted by AliExpress and Light in the Box, Ebanx collects payments in local currencies and sends the funds in U.S. dollars to AliExpress or Light in The Box via a bank specialising in FX trading. AliExpress settles the funds among its merchants from its Chinese bank account.

During 2017, Ebanx acquired a U.K. Electronic Money Institution (EMI) license from the Financial Conduct Authority.

“The main goal of the EMI license is to expand the opportunities to offer a great service for our merchants and for our merchants’ consumers,” said Ruiz. “We’re offering local Latin American payment solutions for businesses in the U.K. and Europe. Having an office in London, which is the financial capital of the world, is a very important step for this goal. It enables us to be closer to London’s financial environment and all the regulatory structure that exists in the city.”

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