Why payment localisation is a must when selling to Latin America

Huge ecommerce sales volume, fast-rising digitisation, engaged customer base: selling to Latin America (LATAM) brings lots of opportunities for foreign merchants aiming to tap into this growing region. However, in order to make the most of LATAM’s market, it’s fundamental to implement strategies that help adapt your business to the region – such as payment localisation. 

Payment localisation refers to the process of adapting your whole payments experience to the needs of a region other than your own – in this case, Latin America. This goes way beyond simply accepting cross-border payments, as we’ll dive into in this article: localisation requires a complete redo of your process. Don’t worry; with the right strategies, it’s complex, but nothing impossible or too costly. 

So let’s take a look at why – and how – to successfully implement payment localisation to sell to Latin America.

Offer local payment methods 

Local payment methods are the basis of payment localisation. It’s a fundamental aspect for companies aiming to achieve success and high sales numbers in LATAM, since local methods are the most commonly used in the region’s countries. 

Companies selling to LATAM but offering only internationally-enabled credit cards as payment methods would engage only an extremely low number of Latin American consumers. The highest volumes and growth rates come from local payment methods not commonly seen on the global stage, such as domestic-only credit and debit cards, localised cash options, local digital wallets, and, of course, the major instant payment phenomenon in Brazil – Pix. 

In a soon-to-be-released study from BoaCompra by PagSeguro, market data shows that domestic-only credit cards accounted for 33% of the total ecommerce sales volume in 2021, and they are expected to reach a 37% market share by 2024. Meanwhile, now sitting at 23%, internationally-enabled credit cards will fall to 22% by 2024. In total, 78% of all LATAM ecommerce sales were paid for with local payment methods in 2021. 

These numbers highlight the importance of foreign merchants offering local payment methods if the aim is to successfully boost your business in Latin America. By partnering up with a local payments company, you guarantee more payment options with a single integration and a smoother settlement process, without the need of opening a local entity in the target country. This is key if you want to offer a truly localised payment experience for your customers.

Charge in local currency 

Localising payments has to do, first of all, with creating an experience suited for a specific audience. For Latin Americans, paying for cross-border sales in local currency is not only a matter of more agility and clarity – but also of stronger financial security. 

That is because LATAM’s local currencies, such as the Brazilian Real and the Argentine Peso, are historically highly fluctuating and devalued when compared with the Dollar or the Euro, for example. Thus, when a Latin American customer makes a purchase priced in Dollars, chances are very high that the final total amount will increase between the purchase date and the credit card billing statement’s closing date. 

Latin Americans are very wary of currency fluctuation, so by charging directly in local currency, the customer knows exactly how much they are paying, which increases conversion rates.

Establish processes for the region considering the high fraud numbers 

Payment localisation not only provides a better customer experience, but also highly strengthens business efficiency. Processing payments locally increases transaction approval rates, speeds up processes, and makes the whole payment step much more agile and secure – for the client and for the company. 

Besides, local payment partners have the expertise needed for handling specific and more accurate risk analyses to avoid the region’s high levels of fraud attempts. With the knowledge of local customer behaviour and local data bureaus, it’s possible to set up better strategies and processes for ensuring risk prevention.

Provide customer support beyond payments 

This also has to do with localising the entire shopping experience, not only payments. Providing customer support to Latin American customers brings up a lot of challenges: language, culture, and even time zones are very different than in your home country. 

Thus, counting on customer service specialists that are able to speak Spanish and Portuguese is a must if you sell to Latin America. Better yet if they’re native speakers, since then you’ll be better prepared to support customers from all LATAM countries not only in terms of language, but also of culture.

Understand the local customer base 

It’s true that, due to the pandemic, domestic ecommerce reached never-before-seen heights in Latin America, growing by 121% between 2019 and 2020. While cross-border sales fell in this period, now that the worst of the pandemic is over, BoaCompra’s research shows that cross-border ecommerce is set to recover very successfully and, from now on, grow at least 27% per year. 

After all, Latin American consumers are always looking for innovative shopping experiences, competitive prices, and vast product variety. Understanding this is fundamental in order to scale your business in the region, since it impacts everything: from product selection to the payment step, Latin American consumers require agility, innovation, and transparency. As we’ve seen, payment localisation is a must if your company aims to offer that for LATAM.

About Peter Elfgren 

Peter Elfgren is Head of Account Management at BoaCompra by PagSeguro. He applies all his vast experience in payments, product, and business to BoaCompra’s Account Management team, providing the best strategic, technological, and operational advice to all merchants.

About BoaCompra by PagSeguro 

With over 17 years of experience, BoaCompra by PagSeguro is a local payment platform that enables worldwide merchants to access Latin America by accepting over 140 payment methods in local currency, with no need for a local entity. It also allows single/mass payouts to Brazilians in local currency instantly with no banking fees. BoaCompra is part of PagSeguro, a disruptive fintech company driven by robust and consolidated infrastructure and capital.