Channeling APIs For eCommerce Payments In LatAm

eCommerce is booming in Latin America. According to recent research, the online shopping market in the region, worth roughly $33 billion in 2014, is now worth nearly $70 billion — and could be worth nearly $80 billion by 2019.

But while that booming business sector is helping to bring new revenue to the area, it’s also bringing its fair share of new challenges. eCommerce merchants often need to pay a host of parties once they receive payment from a customer, including suppliers, shippers and distributors.

Making these payments to partner companies can be a particularly difficult challenge for the growing group of eCommerce merchants based in the region. According to Kevin Fox, executive vice president at FinTech solution provider NovoPayment, several financial institutions (FIs) and other players in Latin American markets struggle to offer modern payment solutions, despite recent advancements in financial technology.

“Many financial institutions in Latin America have trouble innovating and advancing their digital agendas,” Fox said. “Many of them have [a] siloed infrastructure, legacy systems [or] their products are disparate. Combine all that and, as a result, they have a lot of inflexibility in offering digital solutions to the market.”

In a recent interview with PYMNTS, Fox discussed how FIs in the space are working to develop and utilize APIs to enable improved payment acceptance — even with an outdated technological infrastructure.

Helping corporate partners connect

For players in the eCommerce space, staying competitive requires speed and a high degree of automation — not just in processing and shipping products, but also in accepting and making payments.

That makes it more crucial for banks to offer their corporate clients products that address their payments pain points, Fox said, including B2B payment solutions such as accounts payable (AP) and accounts receivable (AR).

“We’ve found that there’s a real disconnect between the reality that these banks are living in and [the needs of] their customers, particularly their corporate customers,” he explained. “Those customers are very dynamic, and they expect the companies they do business with to be able to adapt to their needs.”

To that end, the Miami, Florida-based company recently announced a partnership with Visa that aims to provide improved B2B payments services across Latin America and the Caribbean, with particular focus on business travel payments. In addition, it’s launched its own Developer Hub, an API portal designed to help FIs, issuers and companies to test and experiment with various payment-related functions prior to deploying in a production environment.

Making delivery payments easier

In partnership with a local bank, NovoPayment has been working in Columbia to facilitate real-time payments in the delivery and logistics market. The pair are also working on a set of APIs that link fleets to eProcurement solutions using Visa accounts.

According to Fox, these efforts aim to simplify urban deliveries and the payments that power them, both of which are currently a roadblock for delivery companies and merchants in the region.

For example, NovoPayment recently worked with Rappi, a Mexico-based eCommerce company offering a broad range of products and services delivered straight to customers’ homes. The services include everything from couriers who can be tasked with making withdrawals and deposits at ATMs to more standard eCommerce purchases like groceries or other consumer goods.

While that business model quickly made the company a hit with many consumers, it also posed a problem, Fox said.

“If I’m a delivery driver, [and] I have to go to the store, pick up the goods and bring [them] to you, how do I pay for that at the store?” he asked.

Rappi drivers were initially forced to pay for customers’ purchases in cash, out of their own pockets, then be reimbursed by the company later. But Rappi quickly realized this wasn’t a sustainable business model. The company worked with NovoPayment to create an API that would allow for a more sustainable solution — namely, company spending accounts that can be immediately matched with new employees.

“They can instantly issue one of these accounts to a new driver, hand them a companion card and now they’re on the road ,” Fox explained. “The delivery driver can accept the request, pay for the purchase via his companion card and Rappi can use the information of the time and location of that purchase to help give customers an estimate of when to expect their delivery.”

To the air and beyond

But the potential impacts of API-based payments for Latin American businesses is far from limited to the urban delivery and logistics market, Fox said. Airlines in the space often struggle with payment and cash management issues, too.

For instance, Avianca and LATAM, the two largest Latin American airlines, required crew members to go to a physical window in an airport to be handed per diem cash for meals or travel time. While this process managed to get the job done, it was also ineffective, slow and often fraught with security concerns.

The two airlines worked with NovoPayment to build a system that allows the airlines’ platform client, Servitecba Peru, to create temporary dollar-denominated accounts for their employees. Per diem funds can be transferred from a master account to individual employee accounts, and employees can then access their money via companion cards, called Voygo, and available in white label form.

The solution offers more speed and better security for the airlines, Fox noted, and provides them with more confidence that funds are being used properly.

“We can also create rules that comply with a company’s policies or guidelines,” he said. “If they only want the funds to be used at certain merchant categories — for example, hotels, restaurants and car rentals — or set a limit on how much can be withdrawn via an ATM, that can all be done.”

Airline providers aren’t the only vertical getting in on the API movement, though. Because the solutions can be tailored to the individual polices or needs of a company, Fox sees a wide range of use cases for solutions like NovoPayment’s developing in the near future.

Whether it’s delivery drivers on the ground, pilots and flight attendants in the skies or any company in between, Fox expects API-based B2B payment solutions to become more commonplace in the years to come.

And, with API solutions in place, all parties involved in the delivery process could soon more efficiently receive their packages and payments.