Expanding operations into Latin America presents a major opportunity for global businesses. With an online purchase transaction volume surpassing $479 billion in the region in 2023 and projected to reach $870 billion by 2026 (Ecommerce Brasil), the growth potential is undeniable. However, recent data reveals that a significant share of transactions in Latin America fail before completion, directly impacting revenue.
The issue goes beyond the lack of local payment options, many businesses fail to adapt to the unique behaviors of Latin American consumers. Companies that overlook these challenges risk falling behind competitors that provide seamless and optimized payment experiences.
So, why can’t you rely only on traditional payment methods in Latin America, and how can you prevent revenue loss? Let’s explore.
The biggest challenges in payment processing
International companies often assume that a one-size-fits-all payment model will work, overlooking critical obstacles that can directly impact performance. Some of the most significant challenges include:
1. Market fragmentation
Latin America is not a single, uniform market, each country has its own financial, regulatory, and technological landscape. In Brazil, nearly 77% of digital transactions already take place via Pix (Central Bank of Brazil, 2024), while in Mexico, SPEI accounts for 32% of online payments (Bank of México, 2024). Understanding the preferred payment methods in each market is essential for optimizing revenue.
2. Financial inclusion
In countries like Colombia and Argentina, more than 50% of the population does not own a credit card (World Bank, 2024). This means that businesses relying solely on card payments automatically limit their reach. Offering alternative methods like digital wallets, and instant transfers is key to unlocking the full market potential.
3. Strict regulations
Each country enforces specific regulations for payments and cross-border transactions. In Brazil, local acquiring requirements impact the acceptance of international card payments, while in Chile, new laws mandate that businesses register with local financial authorities to process payments. Failing to comply with these regulations doesn’t just block transactions, it can lead to significant financial penalties.
Payment transparency: the factor that determines success or failure
Offering the right payment methods is not enough, the way pricing, fees, and payment options are displayed can directly impact consumer decisions. Many companies make critical mistakes by neglecting essential best practices, such as:
- Displaying prices in foreign currencies: Studies show that 72% of Latin American consumers abandon their purchase when prices are not shown in their local currency (Forrester,2024), raising concerns over exchange rates and additional fees.
- Failing to calculate taxes and local fees upfront: A lack of transparency regarding additional costs, such as the IOF in Brazil, can lead to purchase abandonment, negatively impacting conversion rates and the overall customer experience.
- Offering only international credit cards: Restricting payment options eliminates a massive customer base. In Mexico, for instance, only 12% of consumers use credit cards regularly, meaning businesses that don’t offer alternative methods miss out on 88% of potential transactions (Brazil Journal,2024).
The solution? A transparent and localized payment experience that clearly displays final prices, eliminates hidden fees, and offers multiple payment options tailored to each market.
How to build a payment process that drives conversions
Businesses looking to expand in Latin America need an efficient payment system designed to align with local consumer behavior. The first step is ensuring localized acceptance to minimize payment failures.
Additionally, payment diversification is critical, alternative methods like Pix, SPEI, and digital wallets broaden a company’s reach and increase completed transactions. Transparency also plays a fundamental role: businesses that disclose costs upfront and display prices in local currencies foster consumer trust and reduce abandonment rates.
Another key factor is user experience. Streamlining the payment journey by reducing the number of steps required to complete a purchase and ensuring a mobile-friendly interface, essential in a region where over 70% of online purchases happen via mobile devices (E-commerce Brasil), can significantly improve conversion rates.
Simplify and scale operations in Latin America
Understanding the particularities of each market, consumer behavior, and staying compliant with regulations in different countries across the region is crucial for successful expansion. This includes integrating widely used payment methods in each market, enhancing the end-customer experience through security and familiarity in payments to significantly reduce the chances of drop-off at the final stage of the purchase.
The key differentiator lies in partnering with a strategic payments provider like FacilitaPay, which streamlines the entire process, enabling businesses to scale efficiently and focus on growth.
Get in touch with our experts to explore how our solutions can help you expand into this high-potential region.
