Latin America's payments market proves welcoming to U.S. businesses

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A handful of misconceptions about Latin America keep many U.S. payments companies out of the region, but the opportunities are too great to let those preconceived notions interfere, according to Sally Baptiste, who helped McAfee take its product south of the border.

Baptiste, who after spending about seven years with McAfee is now the cofounder and CEO of Payment Operations Group LLC, acknowledged that cultural differences and language barriers deterred her at first, but found they were low hurdles to overcome.

Speaking of her work with McAfee, Baptiste said, “in Latin America, we were that surprised with reduced effort we could look at that $78 billion [market opportunity] and take huge chunks of it.”

Ultimately, McAfee’s revenue in Latin America grew to four times that of the company’s revenue in the Asia Pacific (AsiaPac) region, Baptiste said.

Baptiste spoke as part of a panel discussion with other experts at the Electronic Transactions Association’s (ETA) TRANSACT 17 conference last week. The $78 billion estimate came from Javier Vallaure, chief business development officer at allpago, a payment services provider in LATAM (the popular acronym for the region).

The region primarily speaks Spanish and Portuguese, but countries such as Mexico and Chile conduct business predominantly in English, Vallaure noted.

Cultural differences also present few market challenges. Consumers "are very similar across the regions," Vallaure said. "The product you deliver, then, will also be very similar.”

In fact, the foreign nature of a U.S. company's service may be considered a perk. “Latin Americans are very eager for products created in the U.S. and Europe; the only problem for them is how to purchase them,” said Vallaure.

According to Vallaure, 21% of LATAM transactions go through international cards and 48% go through local cards without the ability to purchase in other currencies. The remaining 24% of transactions are initiated with Boleto, a payment method that gives consumers a ticket for payment to take to ATMs, the post office or a supermarket to pay in cash.

Much of the region is still cash-based, Vallaure said, so it is key to have cash-based payment options when moving into the region. Offering consumers the ability to purchase in installments is also a must, he said.

While LATAM payment preferences are different than those in the U.S., Europe and other western economies, the biggest challenge is actually the country’s digital infrastructure. “You need to have redundancies because it is common that infrastructure isn’t so good for payments,” Vallaure said.

There’s also the expense of working in LATAM regions, although rates are decreasing as the local governments in the area pressure the industry to bring of more acquirers for increased competition, Baptiste said.

Baptiste said no company is hesitant about moving into Europe or AsiaPac even though those regions have 11 and nine languages, respectively. And in both regions, there are five or more vendors newcomers will need to connect with.

“In Latin America, there are two languages and one vendor,” she said. “All the service providers doing business in Latin America can help you in multiple countries.”

“Avoidance is not a strategy,” she continued.

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