Have you ever wondered how payments work in various countries around the world? We often accept that the experience in our local country is what we could expect to find around the world, but as we find out with this panel, that's not always the case. One of the most interesting regions for varying payments experiences is Latin America.
One of the most interesting thing merchants find when they are launching in Latin America, is that they need to think about many different currencies. Not only that, but also how to make their digital businesses friendly to a cash-forward culture. For example, if your business is successful in Argentina, and you're ready to expand to Chile, are you prepared to accept Chilean Pesos? When planning for expansion, you have to plan to localize your payment acceptance to offer the best user experience.
Beyond taking payments in local currencies, merchants should consider widening their card type acceptance as well. In many countries, there are card types that outpace the presensce of some giants like Mastercard and Visa. It's critical know what the most popular local card types are in each country.
In short, payments in each country has to fit the way people already live and pay. That is the critical first step to digitizing the payments experience in many countries.
Learn more in this panel discussion from PAYMENTSfn featuring (L to R) Steve Kleb, Fen Slattery, Katherine McClure, Cristina Nicoara, and Lee Jacobs.
Interested in more content about payments in Latin America? We've added this post, and others to our growing list here.
Lee J.: All right. Good afternoon, everybody. So last event of the afternoon. I know we're all excited, we're still in the barn, almost there so we'll try to wrap this up in time. So we're going to be discussing global payments today and with me, today's panelists from, we're going left to right. First is Cristina Nicoara, she prefers the pronouns she/her and she is from San Francisco, California, VP of sales at dLocal, a payments technology platform designed to handle mass online payments and growth markets across Latin America, Asia Pacific, Europe, Middle East and Africa. Cristina's previous experience in payments is at Worldpay and financial systems at Box Agilent in Broadcom. She's passionate about helping merchants streamline their e-commerce processes and strategically increase acceptance conversion rates in global user acquisition.
Lee J.: Next to her right is Katherine McClure who prefers the pronouns she/her from Atlanta, Georgia. She's the business development leader for the Americas at PPRO. PPRO provides payment service providers and acquirers with a comprehensive solution for over 140 local payment methods worldwide to increase cross-border e-commerce. She has over 15 years of payments experience focused on managing product innovation and business development teams and card issuer processing and merchant acquiring. Her experience spans the ecosystem of commerce including emerging technologies, transaction security, blockchain, IOT, EMV, integrated software solutions and mobile wallets.
Katherine M.: Sorry, [crosstalk 00:01:46] alphabet soup.
Lee J.: Yeah, it's a long list. To Christina's right is Fen Slattery. Fen prefers the pronouns they/them. They're from Chicago, Illinois and is the accessibility lead and web engineer at Clique Studios, a design and technology company who partners with ambitious teams to create industry leading digital experiences. They're a web developer who specializes in front end and accessibility. Fen comes to the world of programming from a psychology and physics background at the Illinois Institute of Technology.
Lee J.: Finally to Fen's right is Steve Klebe, who prefers the pronouns he/him and is from Mountain View, California. Steve is the head of business development for PSP Partnerships at Google Pay, a faster, safer way to pay using your phone and apps on the web or in stores. Steve's prior experience in business development at VeriFone and CyberSource and currently serves on the board of directors at Electronic Transactions Association. He has over 35 years of experience in products and services related to financial services industry and payment processing, data security and authentication. So thank you for welcoming our panelists today. We'll try to keep this session as conversational as possible. So I'll start with a couple of questions and then welcome questions from the audience throughout.
Katherine M.: Not here. No, we're seeing bits and pieces of it here, but innovation really is about solving problems and in this market there's not a whole lot of real problems to solve. When you think about swiping a card, it's not that hard, muscle memory, we all do it, it's not that big a deal. But when you're dealing with regions that have emerging infrastructure, China is certainly the example that we all look to. They are able to leap past everything that holds us back and do things like QR payments. That's a huge piece of where we see payments going and it's certainly expanding beyond China. We're seeing some of it here in the States, but countries like the Netherlands and Belgium, a couple examples I can think of coming to mind that are utilizing QR code payments. Because there's a lot more that you can get done in there that you don't get in a pan.
Cristina N.: Yeah. So when you go to China, actually it's funny, I heard this from another panel. If you're trying to give money to a homeless person, he literally will be holding up a QR code. They do not accept any cash there, so we are definitely behind.
Katherine M.: I just think, well how is that going to work with adult entertainment?
Steve K.: I don't think we're going there today.
Katherine M.: Okay. Well now, we don't have to go there, everyone can go there individually.
Lee J.: That's tonight's panel.
Fen S.: Welcome to the five o'clock panel, everyone.
Katherine M.: I'm keeping you guys away from happy hour, I have to entertain you somehow.
Steve K.: It's eight o'clock somewhere.
Lee J.: Okay, back on topic. How are-
Fen S.: I like this already. This is good, keep going.
Katherine M.: We're good. We're good.
Lee J.: It's a fun group. Go ahead, Steve. Go ahead.
Steve K.: So I would chime in and say India is probably one of the places where pretty significant changes are happening. And the interesting thing about it is the problem they're solving was not necessarily a payments problem, it was a taxation problem. So there's a huge black market economy in India and a lot of people were not reporting their income. And so the government in India decided that it needed to move aggressively to electronic payments. So the government mandated a universal payment API, open banking standard and simultaneously a universal authentication standard. And so Google jumped on that and we launched a product called Tez that's now called Google Pay India. And basically through the app we're driving person-to-person payments and literally it's been live for 18 months and we have 50 million active monthly users. So, I mean it's truly a revolution that's going on in the market in India.
Cristina N.: Also there's a movement, we work mostly in Latin America, in India and some of these high growth emerging markets. And although cash isn't as big here, it's quite predominant in Latin America. So there's actually a movement towards digitizing the cash a little bit to make it more online because they're usually offline asynchronous payment methods, you have to support a pending status as a merchant. So for instance, OXXO two years ago moved to OXXO PAY through Conekta. Boleto now is not quite instant confirmation but we started a partnership where it's confirmation within minutes. So there is a movement in the market towards that. It's not quite as innovative as QR codes, but ...
Katherine M.: No, but innovation again has to solve the problems that you have. And when you're in a cash-based economy because of a variety of reasons. You're unbanked, you don't trust the banks, or we've mentioned a couple of times today, going to the ATM on Friday, getting all your money out and then going to the grocery store, right? If that's how you live, payments need to fit how people live because we've tried in various ways to get people to adopt payment methods that just didn't fit their life and it just didn't work. Why make me go through extra steps? I mean a lot of stuff that we've had to do in payments at least in more advanced economies, you need a carrot not a stick. So that's how those types of changes end up happening.
Lee J.: Yeah, what other regulations are driving innovation or hampering innovation in some cases do you see across the globe?
Katherine M.: Well, I think your India example was a good one.
Steve K.: Yeah, the India example is definitely driving innovation. So if it hadn't been for the government putting out these regulations and mandating adoption, this whole thing would not have been possible. In the U.S., a variety of initiatives like this had been tried but they never get off the ground because there's not sort of a ubiquitous adoption and we're a very fragmented marketplace and even Visa and MasterCard as powerful as they are, when they try to launch initiatives, a lot of times they fall on a sword because they can't even rally their constituents to really get behind anything consistently.
Katherine M.: Yeah, no good point. And India as well outlawed a lot of their large denomination bills, which had a definite effect on the cash supply. And that's certainly an example of the kind of stick method, but I think on the carrot side, if anyone's traveled in mass transit kind of going back to the last presentation, if you've traveled on the Underground in London, it's great if you have an Apple watch or a device and a wearable that will make your payments because you tap in, tap out, done. You don't have to get anything out, you don't have to do anything, you can do it with your device. And that's the kind of stuff that drives actual adoption around the world.
Steve K.: Yeah and everyone probably knows that in New York very shortly, they're going to support open-loop. So today you have to go to the machine and buy the card and put money on the card and always think about what balance is on the card, et cetera. But by the end of this year, they're going to launch accepting open-loop cards through Google Pay, Apple Pay, et cetera, right at the turnstile.
Lee J.: Very nice. So a question from the audience came in from [Fareed 00:09:55]. How do you benchmark or rather, which are the top three new payment methods internationally from both a success rate perspective as well as a cost of payments perspective?
Katherine M.: That's a tough question because it depends where you're looking. I mean you look at the entire globe, well certainly you would look at something like an Alipay or WeChat Pay just because of volume, more than anything else. But if you're looking at it from your store's perspective or a set of merchants that you have, you can't just say, "Oh, well I need those because they're popular." Because if China is not your market, Southeast Asia is not your market, those payment methods aren't going to get you as far. Did you have something Fen?
Fen S.: I was going to make a joke. So, you're good.
Katherine M.: Oh no, no, no. We need those, we need those.
Fen S.: No, no. No, you're good.
Katherine M.: Tell me later.
Cristina N.: I completely agree, I think it depends on the business model. But again, WeChat Pay, Alipay is a must. You're probably seeing some ads as well. A lot of U.S. merchants are accepting more China UnionPay, But it also depends where your users are. So if you're looking at your product and seeing where the number of users, not necessarily payments yet because you might not be offering the locally relevant payment methods yet, but if you're seeing that people are on your website, trying to engage with you, trying to engage with your product, you probably should be catering to those potential customers, so it really depends.
Lee J.: One of the things we heard earlier from one of our speakers and I think one of the questions was around accessibility, particularly in meeting government requirements, that type of things. As you're trying to meet accessibility needs for an international payments form for instance, what are the considerations you need to keep in mind?
Fen S.: Hello. Thank you for asking the question, that's the reason why I'm on this panel. I've been mostly quiet. Yeah, so it's really interesting actually to the, my answer to this is related to that question you asked before of are there certain regulations that are causing innovation or hampering innovation? It's majorly related to accessibility because there's such a huge variety in international laws around this. For folks in the audience who weren't here last year to see my fabulous talk on this topic it's, I'm sure recorded. But accessibility, specifically in this context is the process of designing things for people with disabilities, which understandably is related to discrimination. So there's a lot of laws around it in a lot of countries. So we have certain places, like the European Union for example, where there are very strict regulations around digital systems but only ones that are used by the government.
Fen S.: So if you're a government entity and you're taking payments, you have a lot of rules you have to follow, but not if you're in the public sector. Meanwhile in the U.S., we have some weird unclear laws, in Australia they're very, very specific. So you might find yourself as an American company deciding to expand into Australia as an example and having no idea that you had all these rules you needed to be following this entire time. You find yourself perhaps having to redo an entire user interface a lot, including a mobile app just to meet accessibility requirements. The same thing is also true if say you're based in Japan as an example, where there are no regulations around accessibility. Attempting to even go into the U.S. where we have a medium amount of regulations on this topic is a huge jump, it's a huge change. And like I said, this might end up impacting your entire user interface.
Steve K.: Yeah, also closer to home Canada, so if you're going to launch in Canada it's a language issue. So that's an accessibility issue kind of, but you have to put everything in French, but it has to be Canadian French not, right.
Fen S.: And meanwhile, while you're doing that, there's a Canadians with Disabilities Act that's potentially going to pass in the next year or so. So now you have two problems.
Steve K.: The other thing that's just popped up, which I think has been in the news a lot is, and the Amazon Go store was the poster child for this issue and several states have now passed laws that you can't have a store that doesn't accept cash. And so Amazon bowing to that has now announced that they're Amazon Go stores are going to accept cash. And it's not good enough to just have an ATM over in the corner or something like that. They have to actually now figure out a way to accept cash. So that's an accessibility, to serve the unbanked or the underbanked. And you can't discriminate.
Katherine M.: Yeah, it's a big thing because it's very expensive to be poor.
Steve K.: That's true.
Katherine M.: There's things that you have to buy that you wouldn't have to buy or you could, there's so many different things that impact check-cashing services, all that kind of stuff. Now the football stadium, American football, actually both kinds of football in Atlanta, Mercedes-Benz stadium, they are a cashless stadium. And what they've done is they put kiosks where you can buy I believe it's Visa branded prepaid cards and you can use them outside of the stadium as well. It's going to be interesting to see if someone steps in Georgia lawmakers versus California-
Steve K.: Nobody who's in the stadium is poor.
Katherine M.: Well, there's that.
Steve K.: They might be poor after they buy the ticket, but they weren't poor when they bought the ticket.
Katherine M.: They're proud of their $1 hot dogs. It just costs $100 to get in the door.
Fen S.: Related to that example though, you were talking about public transit before in New York. In Chicago, there's a similar Ventra system where you're now able to pay with tapping your phone or using a contactless card. But that card also soon, I think maybe now is going to have the ability to function as a debit card. So you might've initially gained it to use public transit for some purpose, but if you're a person that doesn't have banking access due to accessibility or class issues, you're able to use what was intended as a cool innovation in paying for public transit as a payment method anywhere.
Cristina N.: Yeah and speaking on accessibility, you mentioned cash a little bit. In Latin America, there's these vouchers that you may have heard of. There's Boleto in Brazil, OXXO in Mexico, in Argentina they have two, but being able to adjust your business model to tap into this wider pool of users. So instead of, for instance if you're in the advertising space and providing credits post pay, instead you can create the Boleto option for pre-pay so people can top up that account. So there are innovative ways, I know we touched on innovation a little bit, but you can take these payment methods that probably aren't meant for your recurring business model even, but make it so that you can expand your reach in all the markets.
Lee J.: So what factors go into a merchant deciding to adopt an alternative or a local payment method?
Cristina N.: I think it's looking at who are, so when you look at, "Okay, I am live in Chile, I'm live in Peru." What does that really mean? Are you just localized with the language? Are you still offering U.S. Dollar? You should probably be offering the local currency there, but beyond that, when you're looking at your card split, let's say you're offering Visa, MasterCard. You're probably only tapping into the 20, 30% of the card markets that are internationally enabled. There's a lot of cards that are locally issued. So if I live in Colombia and I go to my bank, I'm probably going to be issued a domestic card. And there's a lot of them, in Argentina there's one called. By itself, it's 14% of the market, so you should be really looking at the local culture, the local trends and habits of folks and not just focus your strategy on how you're doing in the U.S. and mimic that, but really localize when you can.
Fen S.: Yeah, absolutely. Going into a different market is more than just making sure your systems work with their local bank and that you've translated it into their language. Does anybody here work at eBay? No? Then I can give an eBay example and not feel bad. So eBay, I think this was late '90s, early 2000's when they first went into Japan. Pretty much just translated the site into Japanese and hit launch and it was a horrible disaster because especially at that time and still very much now, a Japanese consumer wants to look at things differently from an American consumer. That is an entire difference in user interface. It's more than just, "Well it's in their language, it should be fine." You really have to be talking with actual experts, namely the people who are in that culture that you're looking to expand into.
Steve K.: So Germany for example, if you launch in Germany and you don't accept ELV or bank transfers, you're just wasting your time.
Lee J.: All right. So how about any questions from the audience? I haven't gotten any more emails yet.
Speaker 6: The economy is to be mobile first at scale, right? And a related question is also why is it also that much more difficult in the U.S. for standards to evolve and be accepted? I mean, we're doing EMV when we're already talking about PSD2, 3DS2 elsewhere.
Steve K.: So a quick history lesson is chip cards for example, have been prominent in Europe for, I don't know, almost two decades I think. And the reason originally why chip cards were successful was because phone lines were not accessible, so fraud started going out of control. And so there needed to be a way to do transactions offline. And the way to do that was to have the local intelligence on the chip. Well here in the U.S. we've been spoiled because we have cheap and readily available telecom. And so I worked at VeriFone for nine years and we deployed millions of point of sale terminals over dial up lines. A merchant could call AT&T or whomever and get a phone line installed in two days and it rarely, if ever went down. And so we got sort of just lazy as a result of that.
Steve K.: And there was no compelling reason to switch to the chip cards. Whereas in many other countries the infrastructure didn't exist so they had to be resourceful and leverage other techniques. Throughout Africa mobile payments have become extraordinarily popular because again, the infrastructure didn't exist. The other big thing about the U.S. market is it's so fragmented. In a place like Canada, they were so successful. The five banks got together and agreed to launch in Iraq. And in three years the country just was blanketed and debit was everywhere. It suited the culture, but if those five banks hadn't agreed to cooperate, but to get the banks in the U.S. to agree to cooperate, to do something like that is nearly impossible. So it's just a difference of culture, it's technological need, it's laziness, et cetera.
Katherine M.: And some of it's a scale thing too I think. Because in Canada, it's a smaller amount of merchants to get them to be able to accept contactless cards as an example. Where here, again back to the whole carrot/stick thing, a merchant who has spent $1,000 on their standalone terminal because they didn't need to upgrade anything because they're a simple donut shop and they don't need to have all this stuff. Why would they want to do it?
Katherine M.: So one thing with the new Apple card that's come out, kind of a recent news thing, they made a point of saying, "Okay you guys, I think it's 1% back if you use the card for a purchase. But if you're able to use Apple pay, you get 2%." so I think their thought process is that they're going to have this army of card holders out there talking to merchants and going, "Hey, I'm only getting half of my cash back because you have an old funky terminal, that's not nice." And creating almost a negative experience, which would serve as potentially a greater source of adoption to merchants that don't accept contactless. We'll see how that works out.
Cristina N.: And you alluded to PSD2 in your question and there is a big fine if you don't meet that September deadline, so the carrot/stick is very applicable.
Steve K.: Carrots work better than sticks, I believe.
Katherine M.: They do, especially with honey on them. That doesn't happen a whole lot in our industry.
Lee J.: Speaking of the PSD2 stick, how is that going to affect innovation and payment methods in Europe? Not only cards but also mobile wallets, the user experience that goes along with it?
Steve K.: Well theoretically, once it's deployed, it might be a foundation for more innovation. But from a resource standpoint for just about everybody in the payment space that's active in the European market, most of this year and probably it's going to bleed into next year and a tremendous amount of resource has been distracted dealing with it and the specs are not clear, it's been an ugly mess. So right now it's probably hindering. In the long-term, it'll probably create some additional layers that can be leveraged, but it's short-term distraction.
Lee J.: All right. How about any more questions from the audience?
Lee J.: Are you raising your hand? They're telling me I have five minutes.
Speaker 7: [inaudible 00:24:24] Super. So do you think the increase in ... Oh, hello. Do you think the increase in technology in regards to making payments and making purchases is making things more or less accessible for the average global citizen? Is it making it harder to pay for things easier to pay for things? What's just the hot take on it?
Fen S.: I've got a hot take. Okay, so a little bit ago when we were discussing the idea of certain states are outlawing, merchants not taking cash as an example, restricting a user or limiting a user to only certain kinds of payments is inherently, in my professional opinion, going to be less accessible. If you're a merchant, even just that simple donut shop example you gave, right? There's actually a burger place near where I work that doesn't take cash and some people are like, "Oh cool, hooray. They don't have to worry about cash anymore, that's great." And friends are happy to pay with a card. But if you're not able to choose to pay in cash, that creates issues around the classism as we discussed. And folks for who, whatever reason don't have a card. But also if you're choosing to take cash and not a card, you're also limiting access to folks who for example, have disabilities that make using cash very difficult. Having more options sure might muddy the waters, might be confusing, but at the end of the day you're giving the person more choice, which is good for them. Yeah, hot take.
Katherine M.: My not may be quite as hot take. I think that overall, for the average global citizen, they're getting a lot more choices. Parts of the world that had very limited choices are getting a lot more choices. More and more people are joining the global economy and being able to get things from other countries, being able to participate in more things digitally and in the physical world. So overall for that average global citizen, whoever they are, it's a good thing because they have more choice and more accessibility to more things from around the world.
Steve K.: But it does lead to confusion. As being one of those global citizens, you travel overseas and if you don't remember to make sure that you have a PIN associated with your credit card and you try to use it in certain situations, it's going to be rejected. Going to various transit systems around the world and just standing there like a deer in the headlights, trying to figure out how you're supposed to pay to get on the train. So choice is good, but the confusion that comes from that is a challenge.
Katherine M.: Yeah, but I don't think we're all going to just start using Bitcoin, so it's the same for everybody. I mean, I'm not saying that as a negative either way, but unless there was a global currency, which is not anything I think we're going to see in our lifetimes, you're still going to have the differences and the challenges. But that average global citizen, that may not be the American having the luxury of traveling overseas, overall the world has become, a smaller place because there's more they can do.
Fen S.: I was just going to agree with, specifically you gave the example. Well yeah, no, no with you, yeah. well, I agree with both of you. But specifically, choice good. I like what you brought up within a specific sector though. It didn't even occur to me as a citizen of Chicago to imagine a reality in which I could go to New York and use the same card and now I'm going to go home and be very sad that I can't. But I do think of things actually the previous talk about tolling. Being able to use my same transponder when I go to Indiana, when I go to other adjacent states. That's great, I would like to not be confused and overwhelmed by different systems but have the choice to use what's best for me. You're both right.
Cristina N.: And it's very inviting if you're a brand. It almost welcomes this global population in. So there is a little, you don't want to offer everything but it depends on, it's also incentivizing, right? If you're a larger ticket merchant, maybe being transferred to you is less costly so you're probably going to want to offer that versus other options.
Lee J.: Well great. Well we're out of time, but I really want to thank all of our panelists today. And also thanks to the audience for sticking around for the last session. Ran a few minutes over, but we do pay overtime here. So since we, since we pay in beer, you get one and a half times what you were originally allotted at happy hour. Thank you.
Katherine M.: Thank you.