There is probably no bigger commercial success story in the world over the last several decades than Colombia. To witness it, just go to Centro Comercial Andino, the Bogota high-end shopper’s paradise located in the upscale neighborhood in the ‘Zona Rosa’. It contains 205 stores, becoming one of the biggest and the most exclusive mall in Colombia.
Back in the 1990s, most of the country was controlled by either guerrillas or cartels that led to economic turmoil and set back their development aspirations. Violence used to be everywhere.
Yet today, Colombia is a bright spot in the eCommerce world. It has entered 2020 as the fourth largest eCommerce market in Latin America, endowed with great resources, improved quality of life, a large digital audience, and market-friendly policies. According to the forecasts, the Colombian eCommerce is expected to grow and reach six billion U.S. dollars by 2022.
Is Colombia the new eCommerce paradise?
Colombia has had an increasing influence in the Latin American region, catapulting to new highs in eCommerce services. This year, around 34 million Colombians are connected to the internet, 22 million of which are digital buyers.
Among the largest online shopping segments are multimedia, household items, fashion, and food & beverages powered by online delivery services, Domicilios.com and Rappi. These two giant apps acquired around 75% and 25% of the total internet-savvy users and became the backbones that transformed e-services in Colombia.
A massive boom is taking hold in the FinTech ecosystem as well: Colombia has become the third-largest in LATAM.
Offline past, online future?
Yes and no.
The situation is ambiguous as, unlike city dwellers, people who live in rural areas have different shopping opportunities. Colombia is a geographically varied country. There are huge mountain ranges, rainforests, plains, and plateaus on the extreme points of the country. To solve the problem of poor infrastructure, about 7,000 ‘digital kiosks’ were set up in rural areas for people who don’t have the internet at home. Among the new government’s plans are to provide high-speed internet to more sites across rural Colombia and foster digitalization.
Things are different in urban areas. Shopping websites have attracted a giant digital audience (mainly 25-40 years old) that prefer to browse multi-category platforms such as Mercado Libre and Dafiti. Although they are looking for a flexible shopping experience that will allow them to make a one-click purchase, a large portion of buyers still resort to old-school payment methods.
Most popular payment methods for online shopping in Colombia
While the future is still up in the air, the present requires companies to offer all possible local payments at the checkout for fast conversions and a better buying experience. Colombian shoppers use a lot of different alternative payment methods (APMs) — from credit/debit cards and installments to cash payment and mobile wallets, i.e. Google Pay, Apple Pay, and PayPal.
Among the most popular alternative payments are:
1. Local credit cards with installments: Visa/MasterCard/Amex/Diners Club.
Domestic cards are considered to be one of the safest payment methods and are used by 51% of people. In spite of the high adoption rate, most shoppers use them as an installment option. Colombians indeed are as comfortable with installments at the checkout as Europeans with credit cards.
2. Cash payments
Cash-based payments take 21% of all eCommerce purchases in Colombia. The offline payments represent the invoices that are issued by local payment networks, such as Via Baloto or Efecty. Besides these popular cash payment options, there are several alternatives that many Colombian consumers are familiar with. One of those methods is Davivienda cash payment that enables shoppers to pay for purchases at any ATM, post office, or physical stores country-wide.
3. PSE (Pagos Seguros en linea)
Pagos Seguros en linea, or PSE, is the most popular payment method provided by a national bank consortium, ACH Colombia. With this option, shoppers can pay with their bank accounts.
Build your business in Colombia with Davivienda cash payments
In fragmented markets, the payment landscape may seem too complicated. Luckily, there is a way to overcome these challenges and make things easier by outsourcing payment processing to a reliable local partner.
Along with traditional card payments, Unlimint has launched Davivienda cash payments and is ready to introduce it to merchants. Davivienda is a Colombian bank that makes it possible to pay in cash for online purchases.
The process is similar to other common cash payment methods in Colombia. After selecting items from a merchant’s website, a customer can proceed to checkout and select a cash payment method. By accepting a payment checkout option, the customer gets on a page that displays a bar code or a payment code.
Banks are not the only option to pay for purchased items. Shoppers can print their vouchers and pay in the nearest location, via Baloto, Carvajal, PuntoRed (store points), Megasúper y Servimás, or with their mobile phones using the Davivienda Wallet typing number.
For companies looking to expand into Colombia, it is good to know that a large number of people prefer to pay with cash-based payments. While domestic cards/installments and PSE have become the dominating options, cash is still taking one a fifth of all eCommerce purchases. Don’t let this missed opportunity jeopardize your business – the more options you cover, the better the conversions will be. We suggest that merchants should partner with a local payment provider to effectively deal with the checkout process and integrate alternative payments.