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How do I go global? Life of a Head of Payments, chapter 3

1
Jan

How Do I Go Global?  

In Wix, the decision to develop our own solution stemmed mainly from this strategic requirement. We wanted to expand to areas such as Brazil and Latin America, and none of the solutions back then offered what we needed in terms of (1) billing system logic (2) globalization of payments.

We did not want to depend on another company’s roadmap, and most providers were much slower than the tempo we were seeking.


Important tip: Before going global, you need to research which local payment methods are most commonly used by consumers in each region/country. You also need an understanding of who are the local acquirers, and what data is essential for local processing.


Here’s an example:

Brazil Use Case

If we take the Brazil use case, we realized that our current success rate was about 30%! Only three in ten of those who entered their credit card actually succeeded in purchasing.

Furthermore, using the local currency instead of the USD did not help much either.

So, we researched and understood the following:



1. The main payment methods in Brazil are:

  • ~75% debit & credit cards (mostly local Visa/MC)
  • ~15-30% cash (mostly Boleto)
  • Local brands of CC: Elo, Hipercard

Although 75% did in fact use credit cards, these cards were mostly local and not international, therefor using our U.S MID and acquirer resulted in a very poor success rate.

We continued our research in regards to local acquiring banks, and found that;


2. The main acquiring banks are:


  • Redecard
  • Cielo  
  • Bradesco  
  • Santander
  • Itau



But here’s the catch - in order open a MID with any of them, you needed a local bank account. And in order to open a local account, we needed to be a Brazilian company. This meant opening a legal entity in Brazil.


3. We continued digging on legal operations / finance and here’s what we found:

  • We required a local entity to process local cards
  • There is a local tax on digital goods in BR
  • We were required to add 1 new field to the payments page (CNPJ)
  • Invoicing needed to be sealed and provided by a local firm


4. We also realized that there were many local payment providers that provided a payment page with several payment options, or what I referred to at the beginning as “aggregators”:

  • Braspag  
  • CobreBem  
  • PagSeguro  
  • Santander
  • AstroPay



Concluding our thorough research, we knew we needed to do the following:

  • Open a local entity and a local bank account
  • Connect with a local acquirer (in our case it was Cielo)
  • Develop the integration with Cielo (including refunds, charge backs etc.)
  • Add the required fields (CNPJ - the ID in Brazil, similar to SSN in U.S)
  • Connect to an accounting firm in order to send legally signed invoices to our users


And that’s exactly what we did.

The results were amazing!

An 85% success rate on initial purchases (everyone told us not to expect more than 70%-75%), and the second country (after the U.S) in number of premium plans sold.

But remember - this process took us nearly a year to accomplish. And even after all was in order, it still took several more months, and many calls to Cielo, to further enhance our success rate (apparently the bank needs to get to know you as a merchant).


Use Case Conclusion:

All of our efforts I just described above were directed towards one country - Brazil. Each additional country we were seeking success in, whether Mexico or Russia, meant a whole new research and integration process.


A few more interesting reads

International Payment Preferences part 1

International Payment Preferences part 2

Six Ways to Increase Your Approval Rate

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