E-Commerce startup CaribShopper is fresh off winning an exclusive partnership with eBay to cover its expanding Caribbean footprint as it tackles a market that has a lot of promise, but also challenges in processing digital payments.

Its ability to succeed could also open up a huge, largely untapped region for merchants looking for a new market outside of the U.S.

"E-commerce plays a huge role in the region as everything except for food is imported," said Kadion Preston, CEO of the Miami-based CaribShopper. "Everything from household and office electronics to clothing to auto parts and accessories are all imported."

The partnership with eBay, which launched this month, gives CaribShopper access to more than 900 million listings globally. That will give a considerable boost for the company, which launched in the fall of 2015 and recently passed the 100 merchant mark.

That's the good news. The challenge is processing transactions, which poses myriad hurdles in a diverse emerging market such as the Caribbean.

"Payments is a problem in a cash driven economy," Preston said, adding bank issued cards have a low penetration in the region. "People are afraid of fraud and how they will get their money back if there is a problem or fraud. It's harder than in the U.S."

CaribShopper approaches this problem by offering PayPal integration and card payments powered by Stripe. To address cash payments, it uses a shopping credit system that's similar to strategies mobile operators use in Africa and other emerging markets with a limited banking ecosystem.  CaribShopper sells a feeless WebCard account that can be funded at a Go Top Up network of more than 12,500 convenience stores, gas stations and other locations in the Caribbean. Consumers purchase vouchers that can be entered into CaribShopper's app to add funds.

It's a model similar to M-Pesa, which has its roots in using the mobile top-up process to power mobile payments, and PayNearMe, which enables cash payments in digital channels through a network of brick and mortar stores and vouchers. CaribShopper has partnered with DHL to provide logistics and local address shipping from CaribShopper's warehouse in the U.S.  Local delivery is rare in the region—in most cases people have to go to a specific location to pick up items, Preston said.

"We wanted to build an e-commerce experience that is similar to what people would use in the U.S.," Preston said. CaribShopper charges a servicing fee that's published before the customer makes a payment, and the company does not market the items for sale through its site.

CaribShopper is in16 English-speaking countries in the Caribbean, and it's adapting its website for other markets in the region—there are three Spanish-speaking countries and three French-speaking countries. The local language sites should be up early next year.

"While many of the commerce vendors are enabling 'localization,' such as multi-language, currency and catalog segmentation, the content still has to be translated into the local language, which is becoming a strategy in itself," said Penny Gillespie, a research director at Gartner, adding other challenges include managing payments in an environment that is not heavy on traditional credit and debit cards.

CaribShopper's current retailers include Amazon, Macy's, Banana Republic, DSW, Walmart and Victoria's Secret, retailers that normally are not active in the Caribbean. The company lures these retailers through an internal platform that eases onboarding and transfers the risk.

CaribShopper uses it proprietary platform to manage fraud, chargebacks, customs clearing and verifying arrival. The company also manages currency conversion to U.S. dollars.

"The number one reason clients want to talk to me about payments is because they are expanding to another country and their existing vendor cannot accommodate them in that country," Gillespie said. "Companies have to decide how they are going to do fulfillment."

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