Francisco Andres Leon Velandia, CCO of PayU LATAM, spoke with Oscar Perez (Consultant, London). PayU LATAM is a leading Payment Service Provider operating across multiple Latin American markets. Francisco outlines the key payment trends in the Latin American e-commerce market.
1.What is PayU LATAM’s unique selling point? How is the company expanding across LATAM ?
PayU is the fintech and e-payments division of Prosus, which is one of the world’s largest technology investors. We provide businesses across the world with cutting-edge payment services tailored to their needs: local payment processing with a wide range of traditional and alternative payment methods, cross-border integration for global payments expansion and the highest security standards in online payment processing. Through a single API connection, we can provide access to more than 50 growing e-commerce markets across the world.In Latin America, we have a portfolio of more than 20k SMBs. We are experiencing rapid growth in the region and we are looking forward to consolidating our position based on two main principles: technology and services excellence.
2. How is the Latin American e-commerce market evolving? How is it being impacted by the pandemic? Has PayU identified any trends so far?
The Latin American e-commerce market is undergoing significant growth. The current pandemic has transformed consumer habits when it comes to shopping, with a shift to online commerce. When comparing data from our portfolio in February 2020 with July 2020, we can report an increase of 75% in terms of monthly e-shoppers, 62% in terms of transaction volume and 49% in sales. Growth has been particularly high in segments such as delivery and department stores, with transaction volume in these sectors increasing by over 200% in the same time period indicated above.
In the first seven months of 2020, PayU processed more than 120m transactions, which were initiated by ~21m consumers across 25k merchants in Latin America.
3. What is the uniqueness of the Latin American e-commerce market from a payments perspective? What should merchants be aware of?
Over the next four years, Latin America will be the fastest-growing e-commerce region, only behind Asia Pacific. Nevertheless, it is important to understand that the maturity of the e-commerce market and the payments needs vary by country.
Overall, credit cards are the most commonly used payment method for online transactions in Latin America, with credit cards accounting for 62% of the total e-commerce sales. Credit cards predominance is due to the ability to pay for domestic and international purchases in instalments. A large proportion of credit card purchases is carried out through interest-free instalments.
Nevertheless, in recent months we have seen an increase in the market share of debit cards. This trend is being driven by consumers being reluctant to get into debt in the current economic landscape in which income is uncertain.
Cash-based payment methods such as BoletoBancario in Brazil or Oxxo in Mexico continue to be fundamental to address the underbanked segment. Nevertheless, we expect the resilience on cash-based payment methods to decrease going forward as underbanked consumers shift gradually to electronic payments. This trend is being supported by challenger banks which are providing underbanked consumers with digital bank accounts and payment cards as well as fintechs which are launching e-wallets and prepaid cards targeted at the underbanked.
QR codes and ‘Pay by link’ payment methods are becoming key tools for SMBs to accept online payments as these payment methods allow SMBs to sell on the internet and accept online payments without having a website.
4. What do you do in your spare time?
I love spending time with my 4-year-old daughter, we do a lot of book colouring.
Since the start of the pandemic, I have been doing some adjustments in my house to make it more comfortable, now that we spend loads of time at home. For instance, I have set up new furniture, laid grass on the terrace and improved network connection across the house.
I am also a big football fan. I follow some of Europe’s leagues and always find time to follow the Colombian National team.
5. Which books are you currently reading?
I am currently reading "The hard thing about hard things” by Ben Horowitz. It is really good and there is one sentence that I love from this book “Do you know what´s cheap? Flowers. Flowers are really cheap”. I love this book is because it is constantly challenging my thoughts.
I just started to read again "Emotional Intelligence 2.0." by Travis Bradberry and Jean Greaves (I think I read it for the first time 6 years ago). I enjoy these kinds of books because you can read them many times and you will always have a new reflection that can be applied in your daily life.
My reading habits have changed as my purchasing habits, shifting from the physical to the digital world. I love the fact that I can read the preview of books digitally and if I like them, I can buy the full version immediately.
6. What are your goals for 2021?
My main goal is that my daughter, who is 4 years old, grows up with the right example. She is the most important project in my life.
The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).