For the average customer in the developed world — i.e. Europe or the United States — shopping for something online is something of a no-brainer. They see something they want, they click it into a basket, hit buy — and poof — whatever the widget, the consumer can be confident the good is on its way. Sure, there might be an inconvenient step of having to enter in some card numbers or (even more onerous) an account might require set-up; but on the whole, when one’s shopping journey originates in the developed world, buying whatever one wants from wherever one wants is probably not going to be a much of a stumbling block.
Jump outside of the boundaries of the developed world for a moment or two, though, and a different situation starts to emerge very, very quickly. There are plenty of consumers who want to buy and scores of merchants that want to sell to those consumers — who simply can’t connect to make the conversion happen because of payments.
Such was the experience of Sebastián Kanovich, CEO at dLocal, when he was a younger man attempting to shop in his native Uruguay.
“I come from a small country, and so I am used to thinking of buying products in an international market because no one thinks of making products solely for customers in Uruguay. I’ve always had to rely on merchants in Brazil or in the U.S. — and buying that way, it became very clear that most of what I had for payment method just couldn’t work. For a while I had to share my credit card with my grandmother because she didn’t have an international credit card.”
Kanovich went on to travel extensively to the United States and Europe, where he learned pretty quickly that the payment problem that had given him such trouble back home essentially didn’t exist in the developed world. Which is about when the light bulb went off.
“There is a need there to bridge that gap,” Kanovich said. “All of these emerging users can’t pay in the same way as they can in U.S. — that’s a huge problem, but it is also a huge opportunity.”
The opportunity grew into dLocal, a firm that wants to make it possible for merchants anywhere to collect payments in the developing world — specifically in Latin America, China, India and Turkey, where the firm is focused today.
So what has it done over its near decade in business — and where to next?
The PayPal Of The Developing World
That, noted Kanovich, was something of the opening idea when dLocal was getting off the ground — and their first thought on how to do it was with a prepaid card and a mobile wallet to store it in.
“We thought it would be great, we would own the customer experience. We learned very fast that the merchants just didn’t want that. And we realized, you don’t want to hold the customer — the customer is our merchant’s customer, we want to keep them happy by making it easier for the customer to convert better.”
What merchants need — and what dLocal has come to specializing in offering — is a local payment method for local people that will work consistently and securely.
“We integrate local payment methods and we make sure that the merchant can avoid the hassle of going into each one of the markets — that is what we doing that for them.”
And that hassle shouldn’t be underestimated, Kanovich notes, because entering developing markets is hard work, and very specific work. India and Mexico are very different places, with very different regulatory requirements. It’s work that takes a lot of patience and resilience, Kanovich noted, because regulators and central bankers aren’t always excited to start on this project from the word go.
“We’ll go to a country the first time — we hear no. We go back a second time — we hear no. For those who decide to go to emerging markets, they are going to be interacting with people who have no idea what you’re talking about. You have to be very patient — and a very good communicator about, ‘these are the merchants I bring, these are the controls we have’ — the education has to be there. Eventually you get a small door in — and that is what you work through.”
It helps, of course, that dLocal has been squeezing itself through those doors for the last 8 years, which means it brings a track record of success — and compliance — that it can point to.
And the world, Kanovich notes, is an evolving place — and one where demand for their services is on the rise.
When dLocal first got into the game, its biggest problem was convincing merchants they really wanted to get into these emerging markets — or that they really wanted to get into more than one of them.
“We started in Brazil with Boleto and merchants though Boleto was enough. This has become much more complex than it used to be. Merchants are becoming more aware that markets are much deeper than one single payment method and you really need to understand what is happening on the ground.”
And the market is also advancing — and becoming open to more advanced solutions. Boleto, for example — after an almost four year effort by dLocal — is now mobile-compatible for the first time. dLocal has also opened up direct debit in Argentina, which means merchants in that market are not just taking local cards — they can connect (through the dLocal platform) right to users’ bank accounts.
As for what’s next — expansion, both of the platform and in it. Within the platform, Kanovich noted, is a push to add more features (like mobile Boleto or direct debit). As for expansion, the next big target dLocal is considering is Africa, a series of developing markets where it currently has no presence — though according to its CEO, that is something that he has spent years thinking about how to change.
And when they get there, we’ll be among the first to tell you all about it.