Ranging from news articles to recent CEO interviews.
(Los Angeles) April 21, 2014—Payscout, Inc. releases a case study which details one American business’s difficulties in operating within Brazil’s eCommerce market. Payscout assisted the company with its processing errors and says infiltrating the global eCommerce economy led by the BRIC nations is the key to a thriving U.S. economy. The booming BRIC nations - Brazil, Russia, India and China - have become alluring prospects for businesses looking to enter an emerging global eCommerce market. But each country that comprises the BRIC nations is governed differently and has unique requirements for eCommerce transactions, making it difficult for some American small to medium-sized businesses (SMBs) to reach potential customers.
In particular, Brazil operates within a closed-loop network, which restricts Brazilian cardholders to only using their credit/debit card within the country—a fact which led one U.S.-based merchant to contact Payscout, Inc. for a solution, when over 90 percent of its Brazilian transactions were declined. Payscout, which specializes in seamless multi-currency processing, assisted the merchant in accepting credit card payments, complying with complex tax codes and transferring Brazilian currency payments to their U.S. bank accounts.
Problem: Customer “X” wanted to sell a new product concept to its Brazilian target market. “X” called their merchant service provider (MSP) and was told that the provider offered an eCommerce solution for processing credit card transactions in Brazil. Therefore, “X” began executing its Brazilian expansion plan by signing new manufacturing agreements, developing the new product line, building inventory, hiring a new fulfillment company, creating global eCommerce website, and then launching the product. But once the business was fully operational, the issues began immediately—over 90 percent of the transactions were being declined, resulting in thousands of dollars in lost revenue.
Action: “X” called its MSP to address the high rate of declines and was told that the declines were due to being non-approved by the Cielo framework, a network which regulates VISA and MasterCard transactions for Brazilian cardholders. The MSP informed the merchant that they had no Brazilian eCommerce solution. “X” had already spent thousands of dollars with the MSP to break into the Brazilian market—money which was lost and not to be recovered.
Resolution: “X” then contacted Payscout, which, through its decade of experience in emerging economies, had developed proven eCommerce solutions for the Brazilian market. Payscout implemented a solution through its Brazilian subsidiary, Payscout Brazil, which allowed “X” to sell to the Brazilian market within one week.
Payscout CEO Cleveland Brown says that due to Brazil’s closed-loop network policy, American businesses wanting to sell to Brazilian consumers must complete a very difficult sequence of steps to establish a payment presence and to make credit card acceptance a reality.
“In order to find an acquirer in Brazil, a business must first establish a Brazilian corporation—this is an extremely difficult process that can take years to set up properly,” said Brown. “One of the rules for setting up a corporation is to establish a permanent business residence that is site inspected with functional working employees. In order to hire employees, the business must first learn to navigate the complicated labor law system in the country.”
Brown says that the entire process of operating within the Brazilian market is arduous and must be regulated by an experienced team of accountants, bankers, lawyers, employees and consultants on a daily basis in order to avoid ever-changing compliance and tax issues. According to Forbes magazine, Brazil has the most complicated tax structure in the world, causing tax professionals to spend 2,600 hours per year in complying (1).
Because the limitations severely restrict American SMBs’ ability to enter the market within a reasonable time period, Payscout took measures to eliminate the numerous steps necessary to accept credit card payments in Brazil. Payscout’s turnkey approach, which Brown says is a direct result of the company’s existing relationships with overseas banks and experience in managed risk processing, helps American SMBs maintain compliance and enter global markets. Payscout, Inc.’s subsidiary, Payscout Brazil, is the intermediary between merchants and the bureaucracy, in that through its payment network, online retailers are able to receive direct payments from cardholders.
Brown believes that with an ease in eCommerce transaction processing, U.S. businesses will have access to global clients who are interested in and willing to purchase their products, allowing SMBs to capitalize on the larger eCommerce market while also expanding global distribution trends.
“Multi-currency processing would give American businesses the ability to capitalize on the growing foreign demand for American goods, a benefit to our economy as a whole,” said Brown.
Payscout helps businesses with low-cost merchant processing, allowing small to medium-sized enterprises across a multitude of industries to build relationships with clients while also being able to focus on global growth. Payscout specializes in online/eCommerce retailers, with a predominant proportion of card-not-present transactions.