Latin America’s digital transformation is a huge growth opportunity. That is, as long as you don’t treat Latin America as one big place.
It’s a roundabout way of saying that this continent of 33 nations and over 600 million people is made up of 33 individual markets, which means players in digital goods and services like streaming entertainment are savvy to s tackle one or two markets at a time, ideally with the right partners. .
So said Andrew MonroeGlobal Head of Games and Media at Worldline, in an interview with Karen Webster of PYMNTS. With around 70 million people in the region now subscribing to streaming services compared to the 500 million with internet access, much of it mobile, Monroe said this was the delta of the growth opportunity. But there the simplicity ends.
When asked what companies often get wrong when making a move into Latin America, without hesitation, Monroe opted for regulatory readiness.
“I wish individuals within these multinational corporations would ask more questions about the regulatory environment and the compliance environment ahead of time,” he said.
Worldline sees “a lot of people rushing in, then once they get in [they] realize…regulatory compliance environment, import-export taxes, taxes on digital goods and services, keeping money in country, taking money out of country” differs from country to country. another and can stop a cross-border expansion plan in its tracks.
“Start asking these questions first and use them as part of the overall business case for entering the market so that once you’re there it’s less reactive since you’ve already identified so proactive what it is,” he said.
Citing a litany of differences in regulations, payment preferences, access to credit, access to banks and use of cash, he said: “You have to come up with an individual strategy for each country. Don’t try to tackle everything all at once. Go to the countries that have the greatest potential for the goods or services your business offers,” then define your payment strategy.
For example, he noted that an expansion strategy heavily reliant on credit card payments would exclude 90% of the population of many Latin American countries where credit cards are barely used, while others, such as Brazil, have card penetration closer to 50%. . Same thing with digital wallets.
For this reason, he said, “It is important that traders, when creating this Latin American strategy, identify your potential top countries. For most people, that will be Brazil, Argentina, Mexico, and Colombia, because those are sort of the big four in e-commerce. »
Payment Methods Unlock Latin America
Given the immediacy that consumers expect from streaming and digital services, payment methods must optimize both the customer experience and the provider’s need to be paid.
Monroe observed that while customers in Brazil are more digitally connected and are likely to use payment methods that may include the PIX real-time network, other countries still use cash vouchers that don’t settle immediately. In other countries, a strategy centered on credit cards would exclude 90% of the population. These nuances are essential to success.
“It is important to understand the different mechanics of individual payment methods because otherwise you put your business at risk of fraud or you put your business at risk of losing goods and services if you give it too soon without payment is not 100% confirmed, or you create an undesirable user experience” if it takes too long to engage.
Noting estimates that around 80% of internet access in the Latin American continent is via mobile, Monroe said many providers of digital goods and services are embracing mobile as the path of least resistance. It’s smart, provided it’s personalized.
“The user experience should be tailored to a mobile device, from the way the user registers to the way they navigate through the app itself or the site itself on a mobile device, Along the payment, it has to be suitable for someone using it on a portable device,” Monroe said. Speeds ranging from 5G to 3G also need to be considered.
Traders are looking for simple turnkey solutions to resolve this complex group of nations into a single market, but there are problems with one-size-fits-all approaches. Better to work with experts who understand the preferences and capabilities of each distinct nation.
He said, “You want to choose a vendor who can get you in easily, who has that kind of initial turnkey solution, but who can also help you scale and grow with your organization as you gain success, as you become more sophisticated, as you add more local consumers.
Know before you go
Webster noted the importance of knowing the trendlines at the intersection of technology, consumer experience and payment preferences in this diverse and competitive region.
To that, Monroe said that’s where knowledgeable partners with a presence in Latin America pay off, as businesses can save time and money by leveraging that payment expertise.
“There is a need to understand and treat Latin America as a truly unique animal,” he said. “Use a partner who knows current payment trends, but looks forward to [at] where do these go in the future. I would highly recommend hiring a Worldline or any other type of PSP that focuses on this region and really understands it.
Building flexibility into the business expansion roadmap is an approach that helps in all of these areas. This will be decisive as more and more streaming providers seek Latam for their growth.
He said that as businesses grow, their needs change based on their customer base.
As businesses evolve, “maybe we’re targeting a different demographic that has different payment demands, you need to change that,” he said.
“Perhaps you need to change the entire checkout experience to meet the needs of increased demand. If you haven’t gone there with flexibility as one of your mainstays, you can get a bit stuck, and it’s harder to change things as you grow.