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GlobalCollect has kicked off a series of webinars to take a closer look at the ins and outs of emerging markets by zooming in on the BRIC countries, as those boast double digit growth numbers and thus offer tremendous potential for e-commerce opportunities. That said, the BRIC growth and development shows similarities as well as differences – so one strategy will not “fit all”. How to increase checkout conversion by up to 30%. One common denominator is their relatively closed economy and consumer preference for alternative payments. But each BRIC country has its own intricacies and is rapidly developing a local payment culture combining best-of-breed and hybrid payment methods.
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BRIC Webinar Program
• BRIC program
• Helicopter view
• In-depth per country in next webinars
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Why?
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Source: CIA – The World Factbook | Internetworldstats.com
Country PopulationGDP/capita
(USD)Growth (%)
Internet
Users
203 Mio 10,900 7.5% 76 Mio
139 Mio 15,900 3.8% 60 Mio
1,189 Mio 3,400 8.3% 81 Mio
1,337 Mio 7,400 10.3% 457 Mio
Why?
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Why?
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E-commerce growth
2008 2009 2009 2010
Brazil 39% 40%
Russia 28% 35-38%
India 30% 50%
China 39% 38-45%
Brazil Russia India China
6,24,9 2,3
36,4
8,96,7
3,5
51,0
E-commerce volume in Billion USD
2009
2010
Central themes
BRIC: Appealing but challenging
Local alternatives up to 30%
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Framework
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Similarities
• Relatively closed economies | High E-com growth
• Government/central banks dominant
• E-com infrastructure less advanced
• E-com barriers (e.g. legal, repatriation)
• Higher fraud & chargeback rates (BRI)
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Differences
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Country Overall score ConnectivityBusiness
environmentSocial and
culturalLegal
environmentGovernment
policy and visionCons. & Bus.
Adoption
Brazil 5.27 3.60 6.66 5.73 6.10 5.70 4.93
China 4.28 2.65 6.36 5.40 5.20 4.60 3.11
India 4.11 2.15 6.27 4.67 5.60 5.10 2.88
Russia 3.97 3.85 5.72 5.13 3.65 3.00 3.01
USA 8.41 7.35 7.85 9.00 8.70 9.25 8.60
E-readiness (EIU - 2010)
Country GDP/capita (USD) Debt % Savings Credit cards Debit cards Inhabitants cc/capita dc/capita
Brazil 10,900 35% 17% 191 233 194 0.98 1.20
Russia 15,900 13% 26% 10 119 141 0.07 0.84
India 3,400 12% 24% 24 130 1189 0.02 0.11
China 7,400 17% 47% 199 1800 1337 0.14 1.29
US 46,400 136% 7% 686 488 310 2.21 1.57
Sources: creditcards.com | CIA factbook |
Debt vs. savings
The playing field
Setting up shop
1. Conversion Alternative payment
2. Local collection Resident bank account
3. Entity Admin and operational cost
4. Type of entity determines how to repatriate and how it is taxed• Local regulation of various industries (e.g. telco, travel)
5. Logistics
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The playing field
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Taxes and repatriation
• Tangible or intangible?
• Customer = consumer or business?
• VAT and withholding tax!
Capture relevant data in checkout process
Frequency of reporting and FX trade-offOperational impact + currency exposure vs. cash flow
Brazil
“Craving for credit”
Brazil – The payers
• Installments (“parcelas”)
• Not everyone has a card or gets credit
• Cash or cards
• Relatively high # of chargebacks
Country GDP/capita (USD) Debt % Savings Credit cards Debit cards Inhabitants cc/capita dc/capita
Brazil 10.900 35% 17% 191 233 194 0,98 1,20
Brazil – The players
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Cards Banks Alternatives
Brazil – The players
The star• Boletos – Bank scheme
– push payment using barcode
(via online banking, bank branch, check or ATM)
– No consumer charge
The contenders• Mercadopago & Dineromail
Continuous high growth in last 3 years
– Various funding sources
• Débito Online
– Real-time banking
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Cards60%
Boletos30%
Bank transfer
5%Others
5%
Market share online payment methods
Brazil – Pick your team
Digital Physical Travel
Cards +++ +++ +++
Boletos ++ ++ +/―
eWallets ++ ++ ++
Bank transfer + + ++
Mobile + ― ―
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Payment methods
Reversible? Moneyback refund Recurring
Boletos No (except when paid by check) No No
eWallets No Yes No (being developed)
Bank transfer No Yes No
Mobile Yes Depends on carrier Depends on carrier
Brazil – The gameplan
• Local BT + eWallets + Boletos = avg. of 25-35%
• Your industry requirements (tax!)
• Local entity | Capturing consumer data
• Use third party for FX and repatriation
– BRL cannot be repatriated
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RussiaCards are the alternative
MRC 2010 Semi-Annual Platinum Meeting and 10th Anniversary Celebration
Austin, TX | October 1
Russia – The payers
• Cash lovers – Distrusting banks (1998)
• Prefer eWallets for online as cash substitute
• Majority online purchases = digital
• Travel up 500%
• Many cards not enabled for online
• Cross-border payments growing
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Russia – The players
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Cards Banks Alternatives
Russia – The players
The stars• Yandex (eWallet)
– #1 FOP | RUB only
• Webmoney (eWallet)– #2 FOP | Multiple currencies
(Webmoney Gold)
The contender• Qiwi (ATM cash-in/eWallet)
– Largest network of ATM‟s
– 80 Million users a month
– Funding source for eWallets, VISA prepaid or direct payment 21
70%
10% 12%8%
45%38%
10% 7%
Cash on
delivery
E-money Credit card Bank transfer
2008 2009
Which online payment method do you prefer?
Source: Romir – 2009
Russia – Pick your team
Digital Physical Travel
Yandex +++ +/― +/―
Webmoney +++ +/― +/―
Qiwi ++ ― ― ―
Cards + + ++
Mobile +++ ― ―
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• Preferred payment methods
Reversible? Moneyback refund Recurring
Yandex No No Yes
Webmoney No Yes (time limit) Yes
Qiwi No Yes (to wallet) No
Mobile Yes Depends on carrier Depends on carrier
Russia – The gameplan
• Yandex , Webmoney & Qiwi = average increment of 40-50%– For ATV < USD 500
– Travel = cards | Physical goods ► „see first then pay‟
• Setup local entity + tax passport
• Non-resident is possible, but:– Settlement up to 30 days
– Not all local vendors/acquirers
• Use third party for FX and repatriation– RUB cannot be repatriated
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India
“Waiting for the giant to awake”
India – The payers
• Online buyers situated
in metropolitan areas
• 85% shoppers aged 15 – 352015: 65% of population aged 15 - 35
• Mobile penetration (600 Mio vs. 81 Mio Desktop)
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India consumer trends research: Mint in cooperation with Komli
Media - 2009
Source: IAMAI: “Digital Commerce” – March 2011
India – The playing field
• Logistics
• Two-factor authentication for CNP
• Success rates declined
• Since Feb 2011 also for mobile/IVR transactions
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India – The players
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Source: IAMAI: “Digital Commerce” – March 2011
(Base: 7.5 million Active Internet Users who have made online purchases)
Cards24,5%
Net banking43,8%
Cash cards16,9%
Other14,8%
Market shares - IRCTC
India – The players
Reserve Bank of India (RBI)
The star• Indian banks via net banking
– ICICI, SBI, HDFC
The contender• Mobile (Obopay, Paymate, mChek)
– carrier billing, linking card or bank account
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Source: IRCTC (Indian Railway) –accounts for 25-30% of online payments in India
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India – Pick your team
Digital Physical Travel
Cards ++ +++ +++
Netbanking +++ +++ +++
Cash cards ++ ― ― ―
Mobile +++ + +
Reversible Moneyback
(refund)
Recurring
Netbanking Yes Yes Yes
Cash cards No Yes No
Mobile Yes Depends on
carrier
Depends on
carrier
India – The gameplan
• Net banking, Cash cards and mobile = average increment 20%
• Mobile?
• Local entity (Direct connections or via PSP)
• Trust ► Checkout pages IRCTC (trusted)
• Use third party for FX and repatriation– INR repatriation very limited
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China
Growing to the top
China – The payers
• Cash (COD) first and foremost
• < 35 more prone to credit and
buying online
• Group shopping (19M users)
• Transaction limits per consumer
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Source: CNNIC “ Statistical Report on Internet Development in China “ | July 2010
94
128
0
20
40
60
80
100
120
140
Millio
ns
# of shoppers paying online
December 2009 June 2010
China – The players
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Cards Banks Alternatives
China – The players
The stars
• China Union Pay (CUP)
• Alipay
The contenders• Tenpay (part of Tencent)
• Mobile (202% YoY)
303 M mobile internet users
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China – Pick your team
Digital Physical Travel
Cards +++ +++ +++
Alipay +++ ++ ++
Tenpay ++ ++ ++
Mobile +++ ― ―
Bank transfer + + +
Reversible Moneyback
(refund)
Recurring
Alipay No Yes (not realtime) No
Tenpay No Yes No
Mobile Yes Carrier dependent Carrier dependent
Bank transfer No Yes No
China – The gameplan
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• Alipay & Tenpay ► average increment of 30-40%
• Mobile?
• CNY repatriation not possible
– Setting up entity in China cumbersome
• Taxes approximately 30%
Summary
Summary
• Markets and product functionality less mature
• Seek local tax and legal advice
• Adapt checkout process capture necessary data
• Reporting requirements
• Website in local languages & customs
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Summary
vs.
Match your business with FOPs that support your needs
(e.g. pricing, refunds, recurring, delayed settlement)
Trust, transparency and clarity39
Watch this space
Next Webinars
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http://www.youtube.com/watch?v=lp8d0Pb6UY0
“Brazil in-depth”By Daniel Belda
Product Manager
GlobalCollect
“Gaming in BRIC”To be announced next
week
Perseverance
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http://www.youtube.com/watch?v=lp8d0Pb6UY0
http://www.youtube.com/watch?v=lp8d0Pb6UY0
