Challenges and Opportunities in the Latin American Payout Market
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9 Best Payment Gateways in Colombia
August 14, 2024
Introduction to Payment Gateways in Colombia
As Colombia’s eCommerce market rapidly expands, becoming the fastest growing in Latin America, the need for effective and versatile payment solutions has never been greater.
With an impressive annual revenue of USD 7 billion in 2021 and a projected compound annual growth rate (CAGR) of 6% through 2025, Colombia’s eCommerce sector is thriving. This growth, accelerated by the shift to online shopping during the COVID-19 pandemic, highlights the increasing demand for diverse and reliable payment methods.
Given this dynamic market, businesses in Colombia must choose the right payment gateways to meet the evolving needs of consumers. The top payment gateways not only facilitate smooth transactions but also offer a variety of payment options to cater to a broad customer base.
This guide will explore the 9 best payment gateways in Colombia, focusing on their features, benefits, and how they align with the growing demand for secure and convenient payment solutions in the country’s booming eCommerce landscape.
Trends in in Colombia’s Payment Landscape
- PSE (Pagos Seguros en Línea) Pagos Seguros en Línea, commonly known as PSE, is a leading payment method in Colombia, offered by ACH Colombia, a consortium of national banks. PSE allows customers to make secure online payments directly from their bank accounts without leaving the merchant’s website. This method is gaining popularity because it minimizes the risks associated with fraud and chargebacks, making it a trusted option for both consumers and businesses.
- Paying with Cash Despite the growth of the eCommerce market in Colombia, a significant portion of the population still resides in rural areas where cash remains the primary mode of payment. In fact, cash payments account for 21% of all online purchases in the country. To cater to these customers, several alternative payment methods facilitate cash transactions for online shopping. One notable example is the Davivienda cash payment system, which allows customers to pay for their online purchases at any ATM, post office, or physical store, providing a convenient bridge between digital and cash-based economies.
- Credit Cards with Installments: Visa / MasterCard / Amex Credit cards are widely used in Colombia, with 51% of the population relying on them for payments. What sets Colombia apart is the preference for installment payments. Consumers often opt to spread their purchases over several months rather than paying the full amount upfront. This preference for installment payments means that merchants need to ensure their payment gateways support this option to avoid losing potential sales at checkout. Offering installment plans can significantly enhance customer satisfaction and increase conversion rates.
Top 9 Payment Gateways in Colombia
1. Enovepay
Enovepay is a modern payment gateway that streamlines payment processes for online businesses. In Colombia, it offers several services, including Enove Collections, Enove Payouts, and a white-label solution for businesses interested in providing similar services. Enove Collections simplifies payment receipt for online stores, while Enove Payouts enables businesses to quickly pay their marketplace vendors, affiliates, and suppliers. With availability in 33 countries across Africa and Latin America, Enovepay helps businesses expand their operations globally.
2. Stripe
Stripe is a highly recognized payment gateway, frequently mentioned in discussions about payment processing solutions. It is favored by both large tech companies and startups due to its global reach, extensive plugins for website integrations, and competitive transaction fees. Stripe’s popularity is driven by its ease of use and robust features, making it a top choice for many businesses.
3. PayU LatAm
PayU LatAm is the leading payment gateway in Colombia, chosen by merchants for its free setup and straightforward integration. It offers comprehensive coverage across South America with a variety of payment methods. Additionally, PayU LatAm provides a sophisticated fraud management system that includes fraud detection and machine learning capabilities, ensuring secure transactions for merchants.
4. 2 Checkout
2Checkout stands out as a highly favored payment gateway, with a significant number of merchants opting for its services. Its popularity is attributed to its user-friendly setup process and the ability to quickly process payments using the most widely used payment methods in Colombia. With minimal configuration required, 2Checkout enables businesses to efficiently handle transactions and provide a seamless checkout experience for their customers.
5. Braintree
Braintree, a service offered by PayPal, is a comprehensive payments platform designed to simplify the process of accepting payments. Merchants are drawn to Braintree because of its straightforward, flat-rate pricing and the extensive range of plugins and integrations it offers. Braintree supports all major credit cards, including Visa, MasterCard, Diners Club, and American Express, as well as private cards like Codensa. It also accommodates various digital wallets such as Nequi, Venmo, Daviplata, and PSE payments, making it a versatile option for businesses looking to cater to a broad spectrum of payment preferences.
6. Placeto Pay
PlacetoPay functions as a virtual dataphone, allowing merchants to receive payments and manage invoices. In 2018, PlacetoPay processed over 12 million payments, and by 2020, this number had grown to 34 million, according to Statista. The gateway supports all essential payment methods and includes a complete fraud management system with online transaction verification, an anti-fraud module, and necessary certifications, ensuring safe and reliable payment processing.
7. Mercado Pago
MercadoPago is a popular payment gateway in Latin America, known for its ease of use and widespread acceptance. It supports a wide range of payment methods, including credit cards, debit cards, and cash payments. MercadoPago also offers robust security features and fraud detection, making it a reliable choice for businesses looking to accept payments online.
8. Paymentez
Paymentez is a leading payment gateway in Latin America, offering a variety of payment solutions for businesses. It supports multiple payment methods, including credit and debit cards, bank transfers, and cash payments. Paymentez also provides advanced fraud prevention tools and seamless integration with various eCommerce platforms, helping businesses securely manage their payments.
9. Evertec
Evertec is a comprehensive payment gateway that provides payment processing solutions for businesses in Latin America. It supports a wide range of payment methods and offers advanced security features, including fraud detection and prevention. Evertec is known for its reliable performance and ease of integration, making it a popular choice for businesses seeking a robust payment processing solution.
Criteria for Choosing Payment Gateways in Colombia
With a variety of payment gateways available in Colombia, selecting the right one for your needs involves considering several key factors. When evaluating potential partners, it’s crucial to examine their fraud management systems, ease of integration, available payment methods, and transaction fees.
- Reliability: With numerous payment gateways in Colombia, selecting the right one largely depends on its ease of integration with your online store or website. Opt for a gateway that offers a quick setup and provides reliable support for resolving any potential issues. Ensuring that your payment gateway partner is responsive and efficient can prevent disruptions and keep your operations running smoothly.
- Market Integrations: When expanding your payment options, it’s important to select gateways that offer seamless integration and fast onboarding processes. This approach helps minimize the time and resources your engineering team needs to invest in setting up the new payment systems, allowing you to focus on other aspects of your business.
- Available Payment Methods: For a smooth shopping experience and high conversion rates, ensure that your payment gateway provides a broad range of popular payment methods. The success of your online store depends on having a variety of payment options that meet your customers’ preferences and needs.
- Supported Currencies To enhance the convenience for your customers and avoid unnecessary conversion fees, choose a payment gateway that supports a variety of currencies. Offering multiple currencies makes your online store more accessible to international customers and can lead to higher conversion rates by accommodating their preferred payment methods.
- Security As of 2021, nearly 22 million Colombians were engaging in online shopping, representing over 60% of the internet-using population. However, this increased adoption also brings about greater risks, including a rise in cybercrime. According to an Intel security study, approximately 15% of crimes against merchants in Colombia are linked to cyber threats, resulting in losses of around USD $600 million. To combat these risks, Colombian payment gateways employ various security measures in line with recent regulations to protect both merchants and customers from online fraud. These measures include data encryption, machine learning, PCI DSS Compliance, and tokenization. Understanding these security protocols and integrating them into your fraud management strategy is essential for safeguarding your business.
- Pricing and Fees Lastly, consider the cost-effectiveness of each payment gateway. Transaction fees and pricing structures can significantly impact your overall costs, so it’s important to choose a gateway that offers competitive rates and transparent pricing. Carefully review the fee structures to ensure you get the best value for your investment.
Conclusion
As Colombia’s eCommerce sector continues its remarkable growth, driven by increasing online shopping and a burgeoning middle class, the choice of payment gateways becomes crucial for businesses aiming to thrive in this dynamic market. The country’s rapid expansion, marked by impressive revenue figures and a projected growth rate, underscores the need for payment solutions that can keep pace with evolving consumer preferences and technological advancements.
In this context, selecting the right payment gateway is vital. The top gateways in Colombia offer a range of features tailored to meet diverse payment needs, from secure transactions and fraud protection to support for various payment methods and currencies. With options like Enovepay, Stripe, PayU LatAm, and others, businesses have access to solutions that can enhance the customer experience, streamline payment processes, and ensure robust security measures.
When evaluating payment gateways, consider factors such as reliability, ease of integration, market compatibility, available payment methods, and pricing. Emphasizing security is also critical, given the rise in cyber threats and the need to protect both merchants and customers. By choosing a payment gateway that aligns with these criteria, businesses can better navigate the growing eCommerce landscape in Colombia and position themselves for continued success in this vibrant market.