Thanks to its increasing internet penetration and relatively young population, Latin America has one of the largest, fastest-growing online gaming communities in the world. I’d like to share some insights into this valuable market, gained through my role at Xsolla, where we build tools and services to help video game businesses launch, monetize, and scale.
Xsolla’s video game business engine helps developers and publishers – no matter their size or location – to optimize operations and sell more. We operate in more than 200 countries and territories, 20 languages, and 130 currencies, providing equal access to best-in-class resources for gaming companies worldwide.
We offer high coverage in the video game industry, with more than 700 payment methods – so that anyone, anywhere can play.
LATAM is no different. Enterprise clients such as Epic Games and PUBG frequently request access to this rapidly growing market. Brazil, for instance, has the 13th-largest video game market in the world, with 83% of gamers purchasing in-game items or virtual goods.
But in order to thrive in LATAM, you have to be aware of its market’s nuances, especially when it comes to payment methods – something we’ll address at the LATAM Cross-Border Summit, held by EBANX, in Rio de Janeiro.
Most importantly, you need to provide local payment methods in LATAM. This is a key strategy that can drastically increase game revenue and should be integrated within the game checkout process. Offering preferred local payment methods for the LATAM gamer is critical to success in this burgeoning marketplace.
One thing we’ve learned from our experience in LATAM is that cash is king. Roughly half the LATAM population is unbanked, meaning they do not have a traditional bank account. And almost every country in the region has its own local cash-based payment method, such as OXXO in Mexico, Rapipago and Pago Fácil in Argentina, Servipag in Chile, Vía Baloto in Colombia, Boleto Bancário in Brazil, and PagoEfectivo in Peru.
Boleto, for instance, is a popular payment option used by online gamers in Brazil. According to proprietary Xsolla data, Boleto dominated video game payments back in 2015. Today, credit cards are the most popular payment method (~50% market share) for games in the country, but Boleto still holds a firm second place (~32% market share).
Our research also indicates that games offering local payment methods can attract new players. More than 130,000 unique gamers in Brazil used Boleto when it was offered. 116,000 of them had never used Xsolla before.
In Mexico, another huge LATAM gaming market, OXXO vouchers were also decisive for Xsolla’s growth. Today, they represent up to 20% of gamers transactions, proving that cash vouchers offer a growth opportunity for gaming companies in LATAM, when used as an additional payment method.
Companies looking to accept or enable payments in LATAM should also keep in mind that because of fraud, payment forms are usually much more challenging than they are in the EU or the US. Collecting enough information to prevent fraud without hurting conversion rates is a tough balance to strike. Working with underage online gamers requires special attention. Fortunately, identifying them in LATAM is easy because identity data (e.g. CPF in Brazil and CUIT in Argentina) is always collected and validated at the moment of transaction.
Payment methods aren’t the only factor for success in LATAM, though: customer service is crucial for companies that want to thrive. Xsolla provides global customer support to gamers who have payments-related questions, via live chat, email, and social media platforms. In LATAM, we also have customer support in different native languages, provided by our local partner EBANX.
In addition, Xsolla caters its solutions for game developers and publishers based on their needs. We research and review the market, talk one-on-one with prospects and partners, and then adjust our offerings to fit our customers’ needs. If necessary, we create new solutions for a given market.
Ultimately, any company that wants to grow its LATAM business needs to be aware of and understand the multiple nuances of the market, with local payments being central to success. In Xsolla’s experience, accepting local currencies could triple conversion in LATAM, and adding alternative payment methods could increase paying customers by up to 50%.
And remember expenses such as taxes and high exchange costs when working with countries like Argentina, where potentially high rate fluctuations can affect both. Because of their countries’ developing economies and the prevalence of cash, LATAM payment behaviour is unique. Strive to work with local providers, as they can share their expertise and help with your regional sales strategy.
About Anton Zelenin
Anton Zelenin is a Head of Payment Systems at Xsolla. Anton helps companies like Steam, Twitch, ESL and Bluehole as well as independent developers navigate payment options so they can maximize their profits.
About Xsolla
Xsolla is the video game business engine with a set of solutions to help developers, publishers and platform partners increase sales, revenue and reach new players. Serving only the video game industry, Xsolla operates as a merchant and seller of record for major gaming entities like Valve, Twitch, Ubisoft, Epic Games, and PUBG Corporation. Xsolla is headquartered in Los Angeles, with offices worldwide.
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