As head of PayU Brazil, can you can give us a summary of what the payment landscape looks like in Brazil, in comparison to Europe and US?
Brazil is continually developing as a country and as an economy. This presents huge business opportunities as well as some challenges. This is clear from a lot of the leading payment players being present in Brazil.
When I look at the payments landscape, I see the growth opportunity is still strong and this has attracted new players from all over the world. Wirecard entered the Brazilian market early 2016 with the acquisition of Moip Pagamentos whereas PayPal has been doing business in the country for 5 years now. As such, PayPal cannot be considered a new market player anymore. The payments landscape is very competitive, including acquirers, a very concentrated banking system and some very big PSPs.
As a Brazilian, could you give us some insights into how the political and economic situation have changed over the last few months, and what is your outlook for 2017?
For the past 13 years, the country has been led by a left wing government. As part of their government policy plan, they have increased spending in all sectors. As a consequence, Brazil’s competitiveness slowed dramatically. On top of this, the ruling party was found to have deep set corruption within its organisation, this included the publically owned Brazilian oil company, Petrobras. The company was eventually put under investigation and it was found that more than USD 10 billion had been taken out illegally.
This political period culminated with the President, Dilma Rousseff, resigning from office. Since this happened, the Vice President, Michel Temer, has taken a more transparent and business friendly approach by attracting investment back to Brazil to boost the country’s competitiveness once again.
Overall, as a Brazilian, I admit that while we have had some tough few years with internal corruption, the country is back on the right path. All indications show that 2017 will see the Brazilian economy bounce back
Given everything that has happened in Brazil, what can global merchants expect from your market, in terms of innovation and business opportunity?
For global merchants, now is the time to come to Brazil and pave the road for the next years as the demand for goods and services is huge. Brazil is a very developed country in terms of social media and internet users; there are 100 million active users of mobile phones. Technology companies should be aware of this potential, and, if harnessed correctly, can provide tremendous growth for any company looking to globalise its business model in this ever shrinking digital world.
What do you see as the most important factors for global merchants to be aware of when entering your markets?
There are a few specific local peculiarities that companies should be aware of before entering the market.
Firstly, there is a process called instalments without interest. It allows customers to pay for goods or services in monthly payments, with no added interest fee. Global merchants that aim to start doing business in our country have to fully understand this because it is part of Brazilian consumer culture. Without offering instalments merchant will struggle to penetrate the domestic ecommerce market.
The second particularity is the cash payment method called Boleto. Boleto represents 25% of all sales, offline or online. It’s almost mandatory for a foreign merchant to include Boleto as a payment method at checkout.
The third thing for a global merchant to take into account when entering our market is choosing a player that can provide local acquiring. PayU, for example, is connected to the main acquirers in Brazil and we are able to provide merchants with the main networks in the county, including local ones such as ELO and Hipercard. However, they are accepted only domestically. Currently, ELO accounts for 12% of the credit card sales in the country. The share is big and it is growing rapidly.
Therefore, global merchants should pick a player that can provide local expertise to connect them to the main networks, including Boleto, and to give them the proper knowledge about instalments in Brazil.
Any last bits of advice for a company contemplating expanding into this exciting market?
Brazil is a big economy. It is the eighth country in the world in terms of GDP. Ecommerce has grown despite the recession and it is expected to grow 13% by December 2016, even though the country is still in recession. Brazil is ready to be the next big player in the world after China and India, so I am very optimistic regarding future opportunities both for the country itself, as well as for global merchants.
About Marcos Marins Machado
Marcos is CEO for PayU Brazil, a leading payments service provider in 16 high growth markets around the world. PayU is part of Naspers Group which is one of the largest technology investors in the world. Previously, he worked for MercadoLibre, Redecard (Brazilian Acquirer) and Itaú-Unibanco, one of Brazil’s leading banks. He has more than 25 years of experience in banking and payments. He graduated in Economics and have a MBA in Business Management extended in Kellogg, Chicago.
About PayU
PayU Brazil is a leading online payment service provider dedicated to creating a fast and secure payment process for merchants and buyers. Our presence in 16 high growth markets and local focus enable us to be the experts and provide the best solutions for each market. PayU makes up the e-payments division of Naspers Ltd.
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