Have you ever been in Latin America? Asia Pacific? The Middle East? Africa? While all these places have a completely different atmosphere from one another, there is something they all have in common. If you walk around a market or a local mall you will see, or rather say there is one thing you won't see: credit cards. Instead, you'll see many people paying with cash, some paying with their phones, and some using local debit cards to pay for their goods.
And this doesn't stop at the market. International Credit cards are not commonly used in emerging markets, and shoppers who want to buy online can only do so on sites that allow them to pay with an alternative payment method such as Cash, e-wallets or local cards. Consumers want to shop across borders so they can find cheaper products and buy goods that are not available in their market while retailers see cross-border commerce as a way to enter new markets with a low upfront investment.
The use of international credit cards varies between different emerging markets. In Brazil, 75% of citizens don't own an international credit card, in Argentina 67%, and in Mexico 60% don't have access to an international credit card.
Growth markets across LATAM, APAC & EMEA are the largest untapped opportunity in e-commerce. E-commerce in emerging markets is forecasted to grow by 40-50% year-on-year in the next 5 years, bringing 2.3 billion digital, mobile-savvy consumers into the fold. So while access to emerging markets is highly challenging, it is also highly rewarding.
This is why companies like Avast, Banggood, Booking.com, GoDaddy, MailChimp, TripAdvisor and Uber, are offering local payments methods in emerging markets, and seeing results. After introducing alternative payment methods to their cross- border payment mix in LATAM, Avast saw a 20% growth in checkout conversions for the region as well as 35% revenue growth yearly.
This is true for other regions as well. Prior to working with dLocal, Banggood was processing around $300,000 a month in India. After only 4 weeks, Banggood had tripled the number of their monthly transactions in India across all payment options. The overall revenue for India has reached $1,500,000 in just 2 months after going live with local payments processing in India. This growth highlights how much potential is hidden in these regions, and how offering alternative payment methods helps you scale.
The challenge for merchants expanding to emerging markets starts with the fact that up to 70% of those living in the region don’t have international credit cards, which complicates the process of purchasing goods and services through e-commerce.
In order to process in emerging markets with alternative local payment methods, you need to open a local entity, understand and comply with local taxes and payments regulations, be familiar with the local payment culture and different payment methods, partner with local banks, and deal with lots of other grunt work.
Without a local entity, you cannot take the money out of the country you are processing in, making it an essential part of the expansion process. And you need to do it for every country where you want to process local payments. Opening a local entity can take months to years to complete, and many companies don't have the time and resources to handle it on their own.
By partnering up with a local payments provider, you can save yourself the groundwork that is a part of establishing a local entity. dLocal offers you a fast market entry by acting as the local payment processor, handling your localized cross-border payments. Our payments platform allows our merchants to offer both pay-ins and pay-outs, meaning both receiving payments and paying to partners - all in a simple, single API platform.
We take care of all in-country pay-in and pay-out operations and currency conversions while paying local taxes and reconciling the local currency to you in USD or EUR. We support all the local payment types including local cards, monthly instalments, bank transfers, e-wallets, direct debit and cash payments. Also, dlocal takes care of the funds expatriation, which means that the merchant conveniently receives all the funds in their country of origin. Our 360 single API payment solution allows you to integrate once and get an access to 15 emerging markets and millions of consumers.
Your Big Break
dLocal opens new revenue streams for companies by giving them the tools to safely and easily sell to customers in growing economies. Our payments technology platform is specifically built from the ground up to handle almost any payment method a business needs. By combining deep local markets expertise with flexible next generation tools, dLocal’s technology eliminates operational complexity and enables merchants to effortlessly manage their cross-border payments. dLocal supports its client ramp-up with fraud protection and strategic advice from local market experts so partners can concentrate on their core business instead of compliance.
Many companies are unaware of how accessible and profitable emerging markets are once you make local payment methods available. And as most emerging markets are not yet saturated with lots of competitors, now is the opportunity to leapfrog the competition and establish a strong brand in these fast-developing countries.
Looking to grow your business and leapfrog your competitors in emerging markets? Contact our local payments experts at [email protected].