How MasterCard Plans To Push eCommerce Growth In Brazil

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Nearly two years ago, mobile transactions made up about 4 percent of Brazilian eCommerce. But by January of this year, they were approaching 10 percent, says Daniel Cohen, SVP of Emerging Payments for MasterCard Latin American and Caribbean, a compounded growth he called “impressive.” MPD CEO Karen Webster caught up with Cohen to understand how MasterCard is taking advantage of that market poised for rapid digital expansion, after having held its most recent Masters of Code Hackathon in São Paulo. Cohen unveiled the merchant innovative payment solution that won the round, and dove deeper into why Brazil “screams opportunity.”

KW: So we’re here to talk about the exciting Masters of Code program that MasterCard launched at the beginning of the year. Let’s talk about the recent competition on April 11 in São Paulo. How did it go?

DC: The level of engagement and enthusiasm from the developers in Brazil was amazing. We kicked off at about 9:30 a.m. on the morning of April 11, and we had more than 125 developers participate. They all worked extremely hard to deliver creative prototypes, which they had until the afternoon of April 12 to finish. That’s 30 hours straight of coding.

We had 26 projects presented to a high-profile group of judges from companies like Google, Spotify, Endeavor in Brazil and more. We also had MasterCard’s Head of Emerging Payments in the geo-south region, based out of São Paulo.

KW: So with the 26 projects and an esteemed group of judges, who won and why?

DC: The winning team was called Exchange Capital. They developed an interesting solution that solves a conundrum that many Brazilian businesses face – particularly smaller, medium-sized businesses. In Brazil, when a consumer makes a purchase with a payment card, due to the way the payment system is set up, businesses don’t get paid immediately. Sometimes it can take upwards of 2-3 weeks.

Their solution allows the merchants to get an advanced payment on that card transaction, and receive their funds earlier. This is the kind of solution that creates an online marketplace where merchants can engage with banks and negotiate an advanced payment that’s cost-efficient for them.

Some solutions like this exist in the market, but what’s unique about this one is that the entity can buy the receivable or the amount owed to the merchant in advance.

KW: That is really interesting. I know that when you select the different cities to host these Hackathons, you often have an idea in mind as to the kind of solutions you might have the developers engage with. Was this problem set something you thought developers would solve?

DC: The ultimate goal of Masters of Code and this Hackathon series is to engage with the developer community. We see some of the most successful technology companies in the world today engaging via APIs with developers. So we’re really looking for the best coders from across the globe.

Innovation is happening everywhere, and we wanted to get to as many places as possible and power the next generation of commerce applications. We knew we wanted to make a stop in Latin America, and we chose Brazil – it’s recognized and a relevant global economy worldwide. It’s the second largest market in terms of volume for MasterCard, and it’s a very innovative market in Latin America. Although we didn’t foresee there being a solution to this particular problem, it just came out of the creativity that was there among the vibrant developer community.

KW: Just how vibrant is the developer community in Brazil? Can you give us a sense of how that’s evolving?

DC: We know Brazil, number one, has a vibrant young population that’s very connected. The country ranks among the Top 10 for Internet users, and Brazilians love social media. ECommerce is growing in the region very quickly, in fact in 2014 we have data that show that eCommerce grew by about 24 percent. So more than 61 million people in a population of 200 million have made at least one purchase over the Internet.

So it’s a very connected society, and this kind of openness to technology and innovation is interesting for companies like MasterCard as we work to connect with markets in Latin America. Consumers are really open to using these technologies.

KW: I know each of these areas of the world has their own set of skills and eCommerce problems and opportunities. I am sure it’s been fascinating for you all to see the pockets of innovation appear around the world. The Exchange Capital solution, though, strikes me as one that could really solve a merchant problem and stimulate more of the eCommerce and digital commerce engagement you’re seeking.

DC: Definitely. I think one of the things we’re seeing about eCommerce versus more traditional face-to-face commerce is that connected devices are really shaping how we pay for things – whether that be via a computer or mobile device. We’re seeing this spread of Internet and mobile shopping that’s dramatically changing the ecosystem.

When we look at solutions like Exchange Capital, they’re really creating products and [connections] for this new ecosystem. It’s definitely something we’ll be watching closely over the coming years.

KW: I know you look after a very large swath of geography in the Latin American region. I’d love to get your perspective on Brazil as an economy that moves digital commerce forward, within that part of the world as well as more generally. How do you see Brazil evolving and how do you see the commerce landscape playing out over the next couple of years?

DC: In Brazil, mobile is becoming an accepted tool to conduct financial transactions. We launched a program called Zoom in cooperation with Vivo and Telefonica – it’s a mobile money solution that we launched in 2013. We have more than 360,000 users in Brazil, and it’s really been centered on large urban populations like São Paulo and Rio de Janeiro. It’s great to see that Brazilians have chosen to use their mobile phones to transact, transfer money and pay bills.

There are other mobile money programs that are in the pilot phases in Brazil, but what’s inspiring to me and what’s an indication of where we’re going in Brazil is that consumers are feeling more confident about transacting online. We’re seeing a behavioral shift with consumers becoming more comfortable using their phones, and the mobile commerce space seems ripe for growth.

For example, from June 2013, mobile transactions represented about 4 percent of total eCommerce in Brazil, and by June 2014 it reached 7 percent. And in January 2015, mobile transactions were probably reaching 10 percent. That compounded growth in recent years is really impressive, and when you think of the size of Brazil, that screams opportunity.

KW: What do you think the rest of the world can learn from what consumers and merchants are doing in Brazil with mobile devices and commerce?

DC: I think Brazil is a leader amongst many of the emerging markets and is strongly positioned for growth. I’m not sure how much we can replicate because we always believe that each market is unique, but one of the things we can take away is that we see leapfrogging. In the past, you might have waited 30-40 days to get a phone in your home connected to a standard phone line. Now we see this leapfrogging happening, where people are going directly to the mobile device.

A lot of the programs that we’ve instituted in Brazil have been to cater exactly to that shift. What we need to do in many markets, which is something MasterCard is doing, is to look at the opportunity both in terms of the size of the payments pie and also the pain points we can solve for consumers. That’s really what we’ve done in Brazil – if they’re going straight to the mobile device, we need to figure out how to create products and solutions for that environment and ecosystem.

To listen to the full podcast, click here.

Daniel Cohen
SVP of Emerging Payments for MasterCard Latin American and Caribbean

Daniel Cohen is Senior Vice President, Emerging Payments for MasterCard Latin America and Caribbean. He is responsible for leading the development and commercialization of innovative payment solutions that can be used at the checkout counter, via the Web, mobile phone, tablet, and beyond.

Previously, Mr. Cohen headed MasterCard’s operations in Israel as Country Manager. He was responsible for opening MasterCard’s first office in the country and expanding the company’s local payments footprint. During his time as Country Manager, he led the commercialization of breakthrough innovative payment solutions in the electronic and mobile commerce space.

Mr. Cohen began his career at MasterCard in 2007, leading prepaid card program initiatives across the globe out of the company’s headquarters in Purchase, New York. Prior to joining MasterCard, he was a Strategy Consultant for BTS where he managed corporate strategy projects for Fortune 500 companies.

Mr. Cohen holds a Bachelor of Arts degree from The University of Wisconsin-Madison and a Master’s degree from Columbia University in New York. He is currently based in Miami and speaks English, Hebrew and Spanish fluently.