In the article series about our operating markets we already covered Brazil as the first article and the biggest market in our portfolio. This 2nd article addresses Colombia – one of our 12 operating countries and an interesting market to look at.
After we’ve set foot into Latin America, Mexico and Brazil have been our first offices and markets to conquer. Not soon after setting up our operations there we’ve started expanding to other markets. Colombia was among the first to follow.
Market overview of Colombia
When we talk about South or Latin America, Colombia is usually not the first country that comes to mind. But the numbers show that it is underrepresented. For example: Colombia is the second-largest country in South America after Brazil when it comes to population: 50m inhabitants in Colombia vs. 212m in Brazil. With such a high number of people, the possibilities of doing business are high.
In Colombia there are 22m online-shoppers – 44% of the population. This is nearly double the percentage of the Brazilian market and accounts for 17% of all online shoppers in Latin America. The internet penetration in Colombia is 70% and therefore equally high compared with Brazil. Additionally, approx. 90% of online shoppers use a smartphone.
The amount of e-commerce revenue in 2021 is expected to reach 15bn USD and makes for a 32% growth year over year. This explosive development can in big parts be attributed to Covid-19 in 2020 and in small to the high and steady GDP growth of 4.5% per year for the last decade – unprecedented for the big countries in the region
Payment landscape in Colombia
When compared to Brazil, Colombia looks quite different when it comes to the distribution of payment carriers. The share of credit cards is 47% and 90% of those are international credit cards with the remaining 10% being domestic ones – for Brazil vice versa applies. Placed second are bank transfers with 24% of all transactions, followed by cash with 15%, debit cards with 11%, and 3% others.
Unlike in other LATAM countries, in Colombia installment purchases are very popular. Over 70% of e-commerce transactions are installment-based and processed by local credit cards. But when it comes to cash-based payments, Colombia uses a system that is very comparable to the Boleto Bancário in Brazil, called Via Baloto. Although cash payments are more popular in Brazil, the Via Baloto is considered the first choice for this payment type in Colombia. A Via Baloto receipt enables the consumer to pay in cash at over 13,500 stores across the country. Although Via Baloto is trusted by the population and 85% of people use it, the overall transaction share of this system declines every year because of the availability of more comfortable payment options that arise with the help of banks and their smartphone solutions. A competitor to Via Baloto is Efecty that is supported by approx. 9,000 stores.
It’s interesting to see that especially in Colombia digital wallets seem to be an attractive alternative for the population. Currently, approx. two to four percent market share (based on the source) are covered by these. The first choice is Nequi, offering real-time payments and a solid security model.
For bank transfers the system Pagos Seguros en Línea (PSE) is the first choice and the biggest system of its kind in Colombia. It enables customers to make a bank transfer from their bank account without the need of a credit card.
Growth of PayRetailers in Colombia
We offer all of the more popular payment services like PSE, Bancolombia, Banco Caja Social, Baloto, Movvired, Efecty, SuRed, Gana and many more. As for cards, we support VISA, Mastercard and Diners. When it comes to promising solutions like Nequi as for wallet payments, we have that covered as well. PayRetailers has the advantage of a very streamlined software base that makes implementations of new payment methods a very quick and easy process. We are first to market with most of the new solutions among the payment service provider (PSP) competitors in the region, which shows that our pace of innovation is exceptional.
Colombian markets in the future
We’ve learned that Colombia is a steadily growing market and all expectations are that the shift to alternative forms of payment will continue to happen. The smartphone and internet penetration is already at its peak and creates a foundation for the digital payment solution future. With Covid-19 accelerating the shift we expect to see a substantial rise of digital payment solutions.
PayRetailers is a special PSP with local offices in all our operating countries. We listen to the market and offer a perfect product-market-fit. For our clients we offer an exceptionally easy onboarding with our single API solution and great service. Please contact us to be able to kick-start your expansion to Latin America.
For more info contact our sales team.