How offering local payment method boosts sales for SaaS in Latam
Selling more can be directly related to the ease of paying for your product - and this also applies to SaaS. Understand the impact of having local methods!
How offering local payment method boosts sales for SaaS in Latam

Selling more is directly related to the ease of paying for your product – and this also applies to SaaS

SaaS is growing exponentially in Latin America, pointing to an expansion of almost 25% by 2023, a direct reflection of the highly digitalized and connected moment of the local population. Businesses such as video and audio streaming, games, education, and remote collaboration tools are booming, with the potential to continue developing in the coming years. 

This sector generally operates in a subscription service format, even (and especially) when it comes to digital products. This reflects a worldwide trend, where purchasing the actual product is no longer seen as essential by 68% of adults, according to a study by Thematics. In the same survey it was pointed out that 70% of the public also prefers to pay monthly for services and have a complete package rather than investing in the purchase of products and having to bear maintenance costs.

Many companies also follow this line, seeking to change their focus and costs from CAPEX to OPEX, thus avoiding large financial investments in equipment and software purchases and moving to SaaS, which is more financially scalable. An example of this is that almost half of the SMBs in Brazil have adopted remote collaboration tools for working from home in this format, according to a Capterra survey. Thus, the situation of this segment, both in B2C and B2B is favorable for growth, with heated markets and buyers in various branches.

In this context, it is important to highlight a factor that can have a major impact on the sales of your service, and which is not always observed with due attention: the payment system and, more specifically, where it is performed. With different economic realities in the region, different tax rules, different payment systems, and the different currencies in the region, processing payments abroad leaves room for many problems, such as bank surcharges, excessive taxes, and currency fluctuation.

In contrast, offering local payments and processing payments locally has a number of benefits:

Customer retention 

By offering a payment journey that the customer already knows, there is less friction and possible challenges they may encounter, such as dealing with international companies, fluctuating dollar rates, and unpredictability of the final amount. This creates a much more positive experience, which encourages repeat purchases and customer loyalty, whether the client is a final consumer or a company.

Broader range of possible clients 

Another important point to note is that the main payment method in the region is national credit and debit cards, which limits the purchase of services and products with international payment. Thus, local processing effectively includes this public in its sales options.

According to a study by AMI, the banked population of Latin America grew by 24% in 2020, a response to the penetration of a more digital market and also neobanks that provide a seamless and experience even for people with a basic knowledge of finance system. In this reality, the population rely on local and specific method payments, such as: boleto in Brazil, Oxxo in Mexico and Via Baloto in Columbia.

Domestic-only credit card represented 50% of all purchases in eCommerce made in Brazil during 2020, an impressive number that shows not only the purchasing habits of the population and highlights the importance of local payment methods.

Even though e-commerce penetration in Brazil grew in 2020, access to credit cards—the most readily accepted online payment method—is still limited to an estimated 44% of the population. This reveals an important lesson for international merchants venturing into Brazil: that accepting alternative payment methods will unlock the digital channel for 109 million Brazilians who want to shop online but do not have a credit card.

Also in this regard, even though the unbanked population is falling, there is strong movement of usage of new financial services as PIX. And by using local payment formats, your company can reach this section of the population and thereby expand your customer base.

Better user experience  

With more clarity of the process, fewer fees, and more payment options, your customer naturally has a better experience, which not only facilitates the aforementioned loyalty, but also helps in forming a positive image for the market. In addition, your company avoids friction and complaints that can harm future business, and increases the chance of winning new customers.

Even with all these benefits, many companies are reluctant to make their payments locally due to the complexity of establishing a local entity, difficulty in creating a qualified service team with experience in the country, and lack of practice with local laws. Therefore, BoaCompra is the ideal partner for those who want to grow by offering SaaS in the region without going through the challenges of establishing a local presence.

With a specialized team, extensive experience with the laws and culture of each country and local payment processing, your company grows with our help and without having to deal with the bureaucracy and obstacles of each market. Talk to our consultants now and see how we can help.

Nova call to action
5 sectors that are blooming with SaaS companies in Latam
Why BoaCompra is the best option to expand your SaaS business in Latam