GlobalCollect Eyes Expansion in Latin America
By D.J. Murphy, Editor-in-Chief
Earlier this month, e-payment service provider GlobalCollect acquired Buenos Aires-based e-commerce processor Sub1, expanding its presence in South America with an eye on beefing up operations in the entire Latin American region. The Dutch CNP processor, which enables merchants to sell via the Internet to consumers in more than 200 countries, specializes in offering a wide array of local and global payment methods for online purchases. Sub1 will enable GlobalCollect to leverage a familiar and proven platform in the region to serve consumers in a burgeoning e-commerce market—especially Brazil, according to Tom Staudt, GlobalCollect’s CEO since January 2011.
“Overall, e-commerce is growing 30 percent-plus annually throughout Latin America and the largest area of growth is Brazil,” Staudt tells CardNotPresent.com. “Brazil represents upwards of 50 or 60 percent of the overall e-commerce marketplace in the region, with Chile, Peru, Mexico, Argentina and Colombia being the other predominant markets.”
The payment environment in the region, Staudt notes, is not dramatically different from North America, with American Express, MasterCard and Visa establishing themselves as strong payment brands in Latin America along with a growing list of alternative payment types.
“That’s driven by the growth in the middle market and discretionary income,” he explains. “In a number of different marketplaces, as you grow in discretionary income—basically establishing a middle class—what you wind up seeing is greater utilization of card products, where before bank transfers or direct debit may have been used more. In Latin America, we see a relatively broad array of payment types, particularly on the alternative payments side, which is why the connectivity advantage with Sub1 was very important to us.”
GlobalCollect, which Staudt says has been experiencing “solid, material growth” in Latin America since it opened a Buenos Aires office four years ago, will leverage Sub1’s position as the provider with the most payment connections with acquirers in the region to directly reach more consumers for its merchant clients.
“When you’re in the payments arena, success in many ways is driven by the number of payment endpoints you’re connected to,” Staudt says. “Sub1provides us with a much broader payment footprint throughout Latin America. We will now have more direct connections versus going through a number of different partners or other individual gateways.”
He also points out the acquisition immediately gives GlobalCollect 70 percent market share in Sub1’s home country of Argentina. Brazil, the region’s most lucrative market, is still up for grabs, but Staudt says this is one of the areas where synergies between the companies will emerge.
“Sub1’s market share in Brazil is relatively small, but that’s an opportunity for us. Because they’re a small organization from a staffing perspective, they focus predominantly on technical development compared to having a broad sales force,” he explains. “But GlobalCollect already has a Latin American office with 12-14 people, of which all but one or two are client-facing. One of the synergies is our ability to more broadly expand their connectivity with our sales force.”
Establishing more of a direct presence in the region will be vital to flourishing there, Staudt says. As the company has found in other regions—notably Asia-Pacific—knowledge of the local market and establishing relationships are key, both for GlobalCollect and its merchants.
“We’ve found in the handful of years we’ve been in Latin America that it’s very important to have people in the marketplace who are known to the local members of the business community in order to open doors,” he says. “You can have a great services, a great product, a great capability, but unless you have a strong partner or a direct presence, it’s going to make being able to expand in the region far more difficult because of the importance of relationships.”