Every export market is different. And when you return to your home country after 13 years abroad, you seem to develop a knack for spotting the singularities of a new (old) market.
Take Uruguay, for example, and think just about the way in which people pay for what they buy. As easy as that. You know, debit cards, credit cards, bank transfers, direct debits, standing orders and a bit of cash and the occasional cheque in the UK…
Oh, well, it’s not that straightforward. Take these four examples from Uruguay, a country well-known for its ease of doing business:
1- Mind the (payment) gap. Online shops are increasing. You can “buy” online almost anything you want here. But you can’t pay for it online in most cases. So you order online, you pay offline. Yes, there are “proper” online shops, but a lot of smaller businesses can’t afford to accept online payments, mainly because credit card companies make it ever so expensive, they say (credit card companies blame the Central Bank, and so on).
2- Go for a walk. So, you’ve ordered online and now you need to pay offline. So how do you do it? Well, ingenious Uruguay has come up with two companies worth their weight in gold (literally, probably): RedPagos and Abitab (*). How could I explain them? Mix a bank with a post office, add a bit of Ticketmaster, and you probably get there. What can you do in these places? Pay your bills (because you don’t have a bank account or can’t be bothered with direct debits), change money, receive tax refunds (yes, we have them, because of the weird way taxes are calculated, we tend to overpay them), pay people for jobs (I’ve paid freelancers this way, mainly because most don’t have a bank account AND bank account across different banks are expensive), you can also buy football/event tickets and, of course, pay for your online orders. I used to look at RedPagos and Abitab with disdain but now I love them both. They provide much-needed solutions to their specific market.
3- Banking gets confusing. My two biggest bugbears: first of all, having to pay for transfers across banks, which means you end up outside the banking system for so many payments that could be done through e-banking. Second: being charged for using my debit card too much. By “too much” I mean over 8 times in a month. Which means you have to take money out in big chunks (not good keeping money at home, burglaries are on the rise), which in turn means I end up paying a low balance fine. Catch 22.
4- All chequed out. In the UK I was paid by cheque once. In the same period in Uruguay, I got 6 cheques. That means you have to physically go and collect the cheque (very few people or businesses post them) and then go to a bank or a cashpoint that takes deposits (not as easy as it sounds) to cash your cheque. Now, cheques in most Latin America come with tricks: that signature the issuer forgot, or that badly-written date. You get it. Worse still, you need to cash in a cheque within 15 days. That’s 6 months in the UK (or more, technically, if the debt is not cleared).
I’m not alone. Uruguay is working hard to improve its financial services for its own people and its businesses. Banking penetration is a worry and so is financial inclusion. Therefore, this very month the government has decreed some (complex, as ever) VAT discounts for goods paid for by individuals with debit or credit cards. Electronic POS systems are on high demand, I tell you. But equally high is the need for financial education, in my opinion, and for making it just easier for the consumer. By the way, this is not an exhaustive analysis of banking penetration or the payment systems in Uruguay – but it gives you an idea of what goes on in real life for businesses and individuals, at least regarding some specific aspects.
While we sort it all out, just be aware that your export market might hide a trick or two that you need to be aware of. The more familiar you are with these local practices (anywhere in the world) the more successfully you can plan your overseas expansion. And remember, “one click away” isn’t quite the motto here yet…
(*) On a lighter note, and talking about Abitab, watch this 2013 TV advert with Luis Suarez. It’s just fantastic.