Cross-border Payments

dLocal CEO: Helping Global Merchants Tap Emerging-Market Opportunities

Launching into an emerging market can be a risky move for any global business.  While spend in developing markets isn’t typically as high as, say, in the U.S., consumers in these geographies are quickly opening up lucrative possibilities for global merchants thanks to the availability of lower-cost smartphones and wireless broadband, the ongoing adoption of eCommerce and the move on the part of many countries to innovative their national payments infrastructure.

What this ecosystem evolution means is the payments technology is ready to support global merchants’ needs to facilitate payments for consumers regardless of their location. Yet as these businesses expand across borders, their cross-border payment strategies must prioritize a local experience for the end-user, says Sebastián Kanovich, Chief Executive Officer at dLocal.

Speaking with Karen Webster, Kanovich described why multinational enterprises need to understand the unique payment needs of customers depending on where they reside and how they shop. It’s key to driving adoption of electronic payments, he said, and to helping global merchants succeed in markets they had previously shunned.

The Emerging Market Opportunity

For organizations based in Europe, China and the U.S., Kanovich said he’s seen emerging markets become more of a priority within the global growth roadmap. That wasn’t always the case, however — and only a few years ago, even Kanovich said he didn’t expect to witness the kind of growth in some emerging geographies that he’s seen.

“Only a few years back they would have said they don’t feel confident enough,” he said of organizations’ consideration of emerging markets. “But for instance, Nigeria has to be our fastest-growing market. And to be completely honest, we didn’t see that coming two years ago.”

These regions can be invaluable to organizations seeking growth — but in order for them to succeed in these markets, businesses must localize the payment experience for the end-user.

Cash remains king in many areas, for example, but that doesn’t mean that merchants cannot innovate. Traditionally, it takes 48 hours to confirm a cash payment to a merchant. Now, that confirmation can happen in real time.

“So the user is still paying with cash,” said Kanovich, “but the whole experience changes. And the fact that the confirmation is instant opens up a whole new set of use-cases.”

Working with — not against — customer payment habits is an essential component of finding success in new territory.

Encouraging The Digital Payments Shift

Cash is sticky, but Kanovich said he’s seeing a shift in how consumers pay. That can be due, in part, to high mobile phone penetration and growing adoption of online commerce — but for companies like dLocal who facilitate these cross-border transactions for firms like Spotify and Facebook, one of the most valuable changes in the payments landscape has been innovation of national payment infrastructures.

He highlighted India’s UPI specifically as a particularly sophisticated payment scheme, and one that signals how emerging markets’ payment infrastructures are quickly surpassing those of their more developed neighbors.

“In all of these emerging markets, a lot of them are leapfrogging and are now ahead of the U.S. and Europe, from a purely payments perspective,” he said. “UPI is definitely a much better product than ACH, for instance.”

As these infrastructures grow more sophisticated, the opportunity for payment technologies to integrate into national schemes and facilitate global transactions widens. But the principle remains the same, said Kanovich: don’t focus on educating a consumer on a new payment technology. Rather, make that payment technology so easy to use that consumers adopt them regardless of their understanding.

Amid this ecosystem of payments innovation, competition is growing. For dLocal, which recently raised $200 million, that competition is a positive thing — though Kanovich acknowledged that the market remains highly fragmented. Remaining “payments agnostic” to support any kind of payment method is important to remaining competitive, particularly as merchants face the prospect of “provider fatigue” amid more payment service providers stepping into the space.

What will win out in the end is common sense in order to provide ease-of-use, drive adoption and meet the payments needs of both merchant and customer.

“Payments, it’s not rocket science,” noted Kanovich. “You obviously need to be good in technology, have a great product — but at the end of the day, it’s accumulation of common sense, and you need to build one block on top of the other.”




New forms of alternative credit and point-of-sale (POS) lending options like ‘buy now, pay later’ (BNPL) leverage the growing influence of payments choice on customer loyalty. Nearly 60 percent of consumers say such digital options now influence where and how they shop—especially touchless payments and robust, well-crafted ecommerce checkouts—so, merchants have a clear mandate: understand what has changed and adjust accordingly. Join PYMNTS CEO Karen Webster together with PayPal’s Greg Lisiewski, BigCommerce’s Mark Rosales, and Adore Me’s Camille Kress as they spotlight key findings from the new PYMNTS-PayPal study, “How We Shop” and map out faster, better pathways to a stronger recovery.