PayPal's office in Omaha, Nebraska, U.S. Photo: PayPal/Courtesy

PayPal relies on its network and partnerships to keep expanding in its fastest-growing region: Latin America

With 392 million global accounts and over 15 million active users in the region, Federico Gomez Schumacher, Sales VP at PayPal Latin America, talked to LABS about its strategy on the ground and the partnership with Mercado Libre

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The California-based online payments firm PayPal, just like many other financial companies, saw particular growth in its operations as the COVID-19 pandemic spurred an unprecedented number of people towards digital payments as a result of the e-commerce boom. But in this perfect storm for payments disruption and digitization, what PayPal has that the others don’t is a quite unique network. That’s what states Federico Gomez Schumacher, sales VP at PayPal Latin America, in an interview with LABS

According to him, the reason the company has such expressive numbers comes from the versatility of its network, which can be used by the local storekeeper in Brazil or Mexico in the same way as another one uses in Asia, Europe or the United States. “Obviously, there are large companies doing payments in Brazil and in Mexico, and U.S. companies that have become global. And we have those as competitors, but none of them matches the size and breadth of a network like ours,” he says. 

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In the first quarter of 2021, the company reported 392 million global accounts, 67 million more than a year before. In Latin America, PayPal has over 15 million active customers. In 2019, it had 10.2 million – a jump of about 50%. 

Federico Gomez Schumacher, sales VP at PayPal Latin America. Photo: PayPal/Courtesy.

Many consumers continue to buy online, even if stores have opened because it is not just easier; it’s also safe. And that’s where solutions like PayPal have helped quite a bit because we were in the right place at the right time

Federico Gomez Schumacher, Sales VP at PayPal Latin America.

Available in more than 200 markets, PayPal‘s platform enables consumers and merchants to receive money in over 100 currencies, withdraw funds in 56 of them, and hold balances in their PayPal accounts in 25.

“We are a fairly global company. You can open a PayPal account in over 200 countries around the world, but we don’t have the same business in those 200 countries. In 22 countries, you can not only open a PayPal account and make purchases abroad, but you can also do all of the local transactions. Latin America was the last place where we did that.”

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Last but not least. Although the region was the most recent where PayPal localized its business, by starting with Mexico and following with Brazil, it has become the fastest-growing region for the company, according to the exec. From the 15 million accounts, Brazil currently holds almost 6 million, and Mexico 5 million. Chile, Argentina, Colombia, Chile, and Puerto Rico are the other relevant markets for the company in the region.

Schumacher says the company evolved from an online payment option to a robust platform that comprises a variety of methods, including the most local ones, such as PIX, Brazil’s instant payment system. “Although it’s not used as much by traders, the PIX is a trend we’re predicting – and the next area we’re going to (focus on).”

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In addition to spotting particular growth on alternative payment methods in the region, the executive highlights PayPal’s strategy of acquisitions, such as the commerce platform for small businesses in Europe and Latin America, Zettle, acquired in 2018. Zettle began to operate in Brazil and Mexico in 2013, offering merchants an omnichannel solution with payment services and devices, whether online or in-store. 

“On the consumer side, we are seeing more and more a desire to have simple experiences within the PayPal wallet, such as sending money to friends, recharging prepaid phones or paying bills,” he says.

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Small-medium businesses and fierce competition: PayPal’s plans for LatAm

Although it offers its payment solutions for large enterprises such as Walmart, in Mexico, and Ipiranga, in Brazil, it was with SMBs that PayPal noticed a post-pandemic acceleration. “The platform that the largest merchants use, in the case of PayPal, is exactly the same one that the smallest of merchants use, and that’s the beauty of how we work. It’s the same security and same capacity to run transactions. So in some ways, our business has always been more about small companies than anything,” he says.

“We saw quite an increase in small businesses, with many new ones coming in and the existing ones transacting more.” According to Schumacher, the trend behind this growth is related to a behavior shift in online payments – something that, he pledges, is here to stay.

“People are now ordering food from their houses, either to be delivered to their homes or to be picked up [at the restaurant or grocery store]. Even for small stores, it is the same thing. (…) They need a way to get electronic payments. So the biggest part [on the evolution of digital payments in the region] is the acceleration of existing trends.”

On the heels of such evolution in the digital payments market comes fierce competition. Latin America, a region especially caught by a storm of digital wallets, is the stage for players such as PicPay, with over 50 million users in Brazil; and Nubank, a neobank that has just hit 40 million customers milestone in Brazil, not to mention the waiting list existing in Colombia, and the users in Argentina, and Mexico. 

Latin America is a big market; this is not a ‘one winner takes all’ kind of situation. And the reality is, companies that we see emerging, there are many of them that we compete with, and some that we collaborate with,” he says, mentioning that the best example is the partnership with Mercado Libre

Set at July last year, PayPal was able to deepen its reach in Latin America through an integration with the region’s e-commerce giant, enabling Brazil and Mexico-based users of Mercado Pago, Mercado Libre’s digital payments arm, to use PayPal to make online checkout on merchants that accept Mercado Pago. In December 2019, Mercado Libre had already allowed users of its payments arm in both countries to make international transactions using PayPal. PayPal also became a payment option at the checkout on the Mercado Libre platform.

“Mercado Pago was really interested in our global network because customers want to spend money not just in Mercado Libre, but they want to buy something in China, Europe, or in the US [cross-border purchases]. Well, we have that. And there’s no other regional local competitor that can do that already,” Schumacher adds. “We have a global network of acceptance – and even a network within the countries – that is very difficult for other companies to replicate.”