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August 27, 2021

Latin American e-commerce boom advances Ebanx’s IPO plans

By Robin Arnfield

Ebanx is a cross-border processor enabling international e-merchants to sell in Latin America, and now it is gearing up for an IPO. As e-commerce and digital payments undergo rapid expansion in the region, Robin Arnfield talks to Ebanx’s chief risk officer, Wagner Ruiz, about the Brazilian company’s expansion plans

In June 2021, in one of the largest investment rounds ever raised by a Brazilian fintech, Ebanx raised $430m from Advent International, including $30m to help prepare for its IPO in the US.“The investment we received from Advent is intended to create the base for our IPO, which could be within the next 12 months,” Ruiz says.

Advent is one of the 10 largest private equity firms worldwide and the biggest private equity investor in the payments industry, Ruiz says. He sees the investment as a validation of the path Ebanx has pursued since it was founded in 2012.

“Through our platform, a company can sell in 15 Latin American countries in local currency, and receive settlement of collected payments in US dollars anywhere in the world, without needing a local entity,” says Ruiz. “We also offer settlement in China in renminbi.”

International merchants using Ebanx include Amazon, AliExpress, Singapore-based Shopee, Shein, Uber, Spotify and AirBnB, these last two brands being served through a partnership with French processor Worldline.

“Global merchants with operations in many countries don’t want to have to integrate with multiple local processing platforms. They just want one platform that meets all their processing needs.”

Ebanx plans to use the funds from Advent to accelerate its acquisition program. “Currently, we have several acquisitions in our pipeline.”

In January 2021, Ebanx bought a 30% stake in Brazilian bank Topazio to provide foreign exchange capabilities for Ebanx’s international customers.

E-commerce boom 
Latin America is the second-fastest-growing e-commerce market worldwide after South-East Asia. Americas Market Intelligence estimates that Latin America’s e-commerce market grew by 8.5% year on year to $192.63bn in 2020, as consumers were forced to shop online instead of making purchases in brick-and-mortar stores.Ebanx’s cross-border payments technology enables international merchants to accept over 100 different domestic Latin American payment methods, which generally cannot be used for foreign purchases. This enables Latin American consumers to use payment methods of their choice and pay in their local currency on cross-border marketplaces, with processing taking place locally.

Ebanx serves over 1,000 international merchants, and its payments platform has been used by 70 million Latin Americans. It processed 150 million transactions worth over $3.5bn in 2020, with its transaction volumes in Latin America outside Brazil growing by 200%. Overall, Ebanx’s transaction volumes grew by 38% year-on-year in 2020.

Ebanx also enables local merchants or local subsidiaries of cross-border merchants to sell domestically in Brazil, and is extending this capability to Mexico, Colombia and Argentina.

“We plan to offer domestic settlement in all the countries where we operate, so a company can sell locally in Latin American countries and receive settlement domestically in the local currency,” says Ruiz.

In 2020, Ebanx launched a payout service enabling international companies and gig economy players to send payments to their local suppliers and contractors in Latin America. According to Ruiz, Ebanx’s payout volumes grew by around 56% between 2020 and 2021.

In May 2021, Ebanx integrated its cross-border processing system and its domestic processing technology in a single platform, Ebanx One, which merchants connect to via one API.

“Through Ebanx One, customers have access to payment processing with international and/or domestic settlement as well as domestic and international payout.” Previously, merchants wanting to accept both domestic and cross-border payments had to integrate to two separate Ebanx platforms.

According to Ebanx CEO João Del Valle, because of its connections with Latin American issuers, acquirers and card schemes, the company’s processing platform offers 75-90% payment approval rates in Latin America.

“This is huge, since international acquiring solutions hardly reach 50%. Our platform supports more than 300 payment transactions per second, taking only one second, on average, to respond to requests.”

Multiple payment methods
Ebanx’s payment methods include local-only debit and credit cards, PayPal, bank transfers, digital wallets and cash vouchers such as Colombia’s Efecty, Mexico’s Oxxo and Brazil’s Boleto Bancário. These vouchers, which are widely used by underbanked consumers for e-shopping, contain a barcoded invoice that is payable with cash in a store.Due to high numbers of unbanked and underbanked Latin American consumers, the ability to accept non-card payment methods such as cash vouchers and digital wallets is crucial in the Latin American e-commerce market.

Ebanx’s platform integrates with digital wallets such as Latin American marketplace MercadoLibre’s Mercado Pago, Colombia’s Nequi, Chile’s Mach and Brazil’s PicPay.

Alternative payment methods such as digital wallets, cash vouchers and bank transfers account for 35-40% of Ebanx’s volumes, according to Ruiz.

In Latin American countries such as Mexico and Peru, local debit cards are a popular payment method for online purchases. “Excluding Brazil, where the use of debit cards for e-commerce is only just starting, debit cards represent 34% of Ebanx’s volumes,” says Ruiz.

Ebanx’s platform enables Latin American credit cardholders to pay for e-commerce payments in instalments, reflecting the popularity of this payment method in the region. Currently, around 20% of purchases on Ebanx’s platform are paid through installments, Ruiz explains.

Digital wallets 

During Covid-19, Ebanx saw significant growth in digital wallet usage for e-commerce purchases, particularly by underbanked consumers. Research by Ebanx found that almost 75% of purchases at its merchants made with digital wallets are by new customers, who hadn’t bought from these merchants before.Digital wallet adoption surged in Latin America during Covid-19, due to governments paying emergency benefits to digital wallet accounts. In Brazil, PicPay saw 126% growth in new users in 2020 as a result.

In Peru, which was behind bigger Latin American countries in digital payments, online usage of digital wallets rose by 130% year-on-year in 2020, according to data from Latin American consultancy Americas Market Intelligence.

In Brazil, Ebanx enables merchants such as Uber to accept digital wallet and bank account payments via Pix, the instant payment scheme launched by the central bank in November 2020.

“Pix has had amazing growth in Brazil, and you can use it to pay for anything,” says Ruiz. “We’ve seen some volumes going from debit cards to Pix, but much of the usage of Pix is by people who used to pay with cash.”

Since early 2020, Ebanx has offered its Ebanx Go digital wallet and associated Visa prepaid card in Brazil. Around 60% of purchases made with Ebanx Go are at Ebanx merchants. “We launched Ebanx Go to make it easier for people to buy online,” adds Ruiz. “During 2021, we plan to roll out Ebanx Go in the other countries where we operate, starting with Mexico.”

Ebanx has both Visa and Mastercard licences, so can issue Ebanx Go prepaid cards on either network, Ruiz concludes.

Ebanx: key facts at a glance

  • Operations in 15 countries: Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador, Bolivia, Uruguay, Paraguay and Costa Rica, Guatemala, Panama, El Salvador, and Dominican Republic;
  • Offices in 10 countries: Brazil, Argentina, Uruguay, Mexico, Colombia, Chile, Peru, US, UK and China;
  • Over 1,000 staff;
  • Over 70 million Latin Americans have purchased global services and products through Ebanx’s platform;
  • Over 1,000 clients including AliExpress, Wish, Uber, Tinder, Deezer, Airbnb and Spotify, the last two being served through a partnership with French processor Worldline;
  • Over 100 payment methods are accepted;
  • Ebanx processed 150 million transactions worth $3.5bn in 2020 in Latin America;
  • Ebanx’s Latin American operations saw over 200% growth in transactions volumes in 2020, excluding Brazil.­­

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