Read our intro to what is a baloto and the advantages of offering it to your Colombian shoppers
Colombia is the 4th largest ecommerce market in Latin America, and one of the region’s best-performing economies. PwC describes Colombia as an “ideal environment for investment,” with strong performance across the financial, public administration and commerce sectors in 2020. Despite the challenges created by the current COVID-19 pandemic, we believe that Colombia presents an exciting opportunity for international businesses in 2021.
In particular, ecommerce businesses would be well advised to expand into Colombia – 70% of the Colombian population is online, and there are over 22 million digital shoppers. The market is predicted to reach a value of US$6 billion by 2022.
But, if you’re thinking of expanding into Colombia, you’re going to need to get the hang of the local payment methods. Despite the success of the recent drive to promote access to banking services, roughly 20 million Colombians still remain unbanked. Many others have credit or debit cards that are only valid for local use, or that have prohibitive daily purchase limits.
As a result, Colombia shoppers often require local cash-based payment options to make purchases online. Of these, Baloto (or ViaBaloto, to give it its full name) is one of the most popular options, trusted by 85% of Colombian consumers.
What is a Baloto, anyway?
Balotos are a voucher-based payment method only available in Colombia. Balotos allow customers to pay bills and purchase online, even without a bank account.
Here’s how customers pay with Balotos:
- Your customer chooses Via Baloto as their payment method at checkout. They will also need to provide a cell number and an email address. At this point the purchase is still not yet paid for.
- The customer then receives a voucher with a reference number for their transaction via email or mobile.
- They can then take the voucher to any Via Baloto store nationwide. There are currently over 10,000 stores across Colombia which will process the transaction.
- They hand over the voucher and pay the cashier using whichever payment method they prefer, including cash.
- Once the voucher has been paid for, the transaction is confirmed and the customer receives their receipt for the purchase.
Why Should You Offer Balotos to Colombian Customers?
If you’re doing business in Colombia, there are clear advantages to offering Balotos in your online checkout. For example:
- You’ll increase your sales in Colombia.
Because customers can pay for Balotos in cash, this payment method opens up the ecommerce market to the large percentage of Colombians who still don’t have a bank account. It also means that you’ll be able to accept payments from customers who don’t have a credit card that works on international websites – a very common situation, even for those Colombians who do have a bank account.
- You decrease your risk of fraud.
Balotos are a very secure payment method, trusted by both merchants and customers. In particular, you are at no risk of fraudulent chargebacks. Chargeback fraud (when consumers falsely request that their bank refunds their money after they have received purchased goods) is an increasing issue for online retailers, especially in emerging markets like Colombia. As there is no chargeback mechanism for Balotos, you are at lower risk of this so-called “friendly fraud.”
- You can accept larger payments.
If you’re selling high-value products online, Balotos can be a good way to accept larger payments from customers. Colombian credit and debit cards can sometimes have restrictive limits for daily purchases, and many consumers prefer to pay in installments. With Balotos, customers can pay with cash or via bank transfer, enabling you to receive payment in full more quickly.
- You offer an improved customer experience.
By providing your Colombian shoppers with a convenient local payment method that they know and trust, you demonstrate that your business understands and values their needs. And, by working with a safe and secure local payment method like Balotos, you will improve your payment conversion and approval rates significantly, resulting in a nice boost to your bottom line – while also giving your customers a more seamless purchase experience.
At PrimeiroPay, we help our clients expand into new markets, including Colombia, without the need to open a local entity. We provide all the local expertise you need to get started without all the headaches, plus an effortless payment solution that lets you accept local payment methods and keep your customers happy.
If you’d like our help doing business in Latin America, click here to set up a chat with one of our payments experts.