The Latin American payment landscape is complex and unique. E-commerce is thriving across the continent, but only a minority of shoppers has access to international credit cards. Most Latin Americans are still underserved by financial institutions, and in order to reach these consumers, global merchants need to offer an array of alternative local payment methods.
One of the most perplexing facts about e-commerce payments in Latin America is the ubiquity of cash-based payments. In Brazil, Colombia and Peru, for example, cash payment methods represented more than 20% of e-commerce volume in 2016 . Mexico and Argentina are close behind, with 19% and 18% cash transactions respectively.
But how does it all work?
How cash payments work in e-commerce
Paying an online purchase in cash seems counterintuitive: after all, you cannot feed notes and coins into a computer and click "Pay". But with typical resourcefulness, Latin American merchants have found a way to make online shopping available even to people who do not have a bank account.
The solution is cash-based invoices, issued by nationwide payment networks. When a consumer is ready to check out from an online store, the list of available payment options includes one or more such networks. The buyer selects a network and confirms the purchase, which generates an invoice with a barcode to print.
The shopper then takes the invoice to a local brick-and-mortar agent, such as a pharmacy or a convenience store, and makes the payment in cash. The payment network confirms payment to the merchant, who can then deliver the goods or services.
E-commerce cash payment enablers
The most famous Latin American cash-based payment method is probably Brazil's Boleto Bancário, usually referred to simply as Boleto or "ticket". Regulated by the Brazilian Federation of Banks, the Boleto is issued by banks at the request of merchants, and payable at over one million locations nationwide. For merchants, the Boleto provides an efficient means to reach the 65% of Brazilians who do not own a credit card.
In Mexico, the market leader for cash payments is Oxxo, the country's largest convenience store chain. Its OxxoPay solution has improved the customer experience even further, with features such as mobile-compatible reference numbers and real-time payment notifications to merchants.
PagoFacil and Rapipago in Argentina, Efecty and Via Baloto in Colombia … cash-based payment solutions are prevalent across Latin America, and typically represent around 20% of total e-commerce volume. The exception is Chile, where less than 10% of e-commerce purchases are made in cash.
To cash or not to cash?
If you are only just starting to expand in Latin America, enabling cash payments may seem like a daunting enterprise. However, with the right payment partner, it can be an easy, cost-effective and profitable adjustment to make.
With Worldline’s expertise, you can offer cash payments and other local Latin American payment methods without having to set up a local entity, and with a single agreement and a single technical interface for all payment methods.
To learn more about enabling cash-based payments and optimizing your payment strategy for successful e-commerce expansion in Latin America, download "The smart e-merchant's guide to unlocking profit in Latin America".