In June of 2021, Brazilian fintech companies received record amounts of funding by both local and global investors.
Among the largest investments, payments company EBANX received $430 million by funds managed by Advent International.
We wanted to find out about the company’s plans so, we reached out to Paulo Shargorodsky, VP of Global Merchant Success at EBANX.
A Brazilian living in the US for the past 20 years, 9 of them in the Bay Area, Paulo manages EBANX’s merchant global portfolio. In our interview, he offers insights on LatAm’s e-commerce, the role of digital acceleration in the marketplace, and explains why there’s still lots of opportunities for disruption of the traditional banking, payments systems in the region.
BayBrazil: Founded in 2012 to bridge an access gap between Latin Americans and international websites, EBANX has come a long way and is now contemplating an IPO in the U.S. When will that happen and what is next for EBANX?
Paulo: There is not a date set yet, but an IPO in the US is the goal, since EBANX is a global company. There were recent big moves from EBANX (Push LatAm, which is an expansion initiative launched in 2020; news in the leadership of the company; and the launch of EBANX ONE), and they are all aligned with the IPO-readiness process the company has been implementing. The new round of investment coming from Advent International, announced in June, will also support this process, and will provide additional resources to the company to continue investing in LatAm and getting even stronger and more structured for an eventual IPO.
BayBrazil: Going back to 2012, the Brazilian e-commerce had R$ 22,5 billion in sales and grew over 20% compared to the previous year, according to Webshoppers report. By that time, 42 million people in the country had made at least once an online shopping trip. This was the scenario when Ebanx was created. What were the premises for starting a new business in Curitiba?
Paulo: Back in 2012, e-commerce was starting to gain traction in Brazil. And international e-commerce, meaning purchasing online from overseas, was almost nonexistent, because it could only be made by those who had an international credit card that could process foreign currencies. And this was a very small portion of the Brazilian population, as it is till today. EBANX was founded to bridge precisely this gap, so that international brands could sell to Brazilians and accept local payment methods, like cash vouchers, and also, so that Brazilians could access products and services from abroad and pay the way they wanted.
Although it started doing it in Brazil, EBANX’s clients were global and from several countries, so the company was born with already a global mentality. And also, just like it wanted to bridge the gap between Brazilians and global brands, it soon realized that other Latin American countries had the same challenges regarding local payment methods. So EBANX expanded its operations throughout the LatAm region. And it did all of this from Curitiba, a city in the South of Brazil, where it was founded, where EBANX is headquartered and where the founders are from. It’s outside the traditional startup hubs in Brazil, like São Paulo, but it’s a place that is full of innovation. This is also a very important part of EBANX’s history: we are very proud to be from Curitiba, and we have a close connection with the community there, in the startup scenes, entrepreneurship landscape, and many social projects we engage with.
BayBrazil: Moving forward, in 2020 the Brazilian e-commerce market was about BRL 90 billion and it represents only 4.3% of the overall retail market in the country. With operations in 15 countries in Latin America, EBANX is the main partner in the region for global brands like AirBnB, Spotify, Uber, among others. What is your differential and how is the team adjusting to a changing market?
Paulo: EBANX is one of the only payments companies focused 100% on Latin America, and we intend to remain that way. This means that any new investment, resource, and talent is focused on improving our operations, adding new products, expanding into new markets within the LatAm region, which leads us to be much more specialized and stronger, it allows us to go deeper in our expertise in Latin America. That’s a really cool differential of ours. Also, EBANX is 100% customer-focused, being this customer the merchant, or the end consumer in Latin America. Our goal is not just to process payments, but to provide all the support needed so that merchants can grow and succeed in Latin America, and sometimes that goes beyond payments: we also offer additional perks like market research, localization service, and marketing consultancy.
EBANX continues to evolve – we continue to grow, adjust and change. We are flexible to understand and adjust to the market and the merchant’s needs. When we started 9 years ago, the goal was to make cross-border payments to global merchants. And over time, we saw that they needed to go beyond cross-border, so we started doing local payment processing as well. They needed support for their end user, so we created a Customer Service team, to help their consumers in their local language – Potuguese and Spanish. These are just a few examples of this ‘beyond payments’ approach that we do. We continue to evolve so that the merchant can be successful and grow in the region, seizing all the potential the region has for digital commerce – LatAm has one of the fastest growing digital markets in the world.
BayBrazil: You recently launched Ebanx One to unify the fragmented pieces of operating in a different country. What does it change for clients? What should we expect for the future in Latin American ecommerce?
Paulo: Merchants are always evolving, changing, as markets and consumer behavior. And for us, who are constantly monitoring these changes, we want to simplify what we can to make it easier for clients to navigate these changes. That’s what EBANX ONE brings: through a single API, you’ll be able to do cross-border, local, payin, payout, etc. Business gets more complex and deeper, but that doesn’t mean it needs to get more complicated. We are absorbing the complexity of it all, and simplifying the technology part, so that the merchant can focus on what is most important for them: sales. We take care of everything else.
In terms of what to expect from e-commerce in Latin America: the pandemic changed the game all over the world, and in Latin America it was no different. The pandemic forced a digital acceleration that we had never seen in the market. The LatAm market is still very cash driven, but it was even more a year ago. As the pandemic didn’t leave many options, digital acceleration was kind of forced upon many, and customers who previously wouldn’t be so comfortable using technology platforms, or digital payment products, were exposed to them because this was the only option. Digital acceleration helped a lot to bring new companies to the market, to develop small companies, and EBANX followed this by developing new products, adding new features and new payment methods (like PIX, the Brazilian instant payment system, local LatAm e-wallets, new debit cards, etc). All of this helps to increase access and build more trust among customers.
BayBrazil: Brazil is the largest fintech market in Latin America and the 5th in the world, with about 700 startup companies. What makes its industry so relevant in that country?
Paulo: One of the reasons is that Brazil, and other counties in Latin America, still have a lot of opportunities for disruption of the traditional banking, financial, payments systems, and offer something very innovative to the client. The second point is that as much as the pandemic has helped digitization, Brazil and Latin America in general continue to have a large part of the population being underbanked and unbanked, with challenges in access to more traditional banking systems, credit, etc, so many fintech companies emerge with the goal to serve the needs of these people. Another point, not only related to fintech but to tech in general: Brazil and also other LatAm countries are extremely tech-savvy and open to innovation – take WhatsApp for instance: Brazil is their second largest market, only behind India. The same for Uber: Brazil is also their second largest market, and the Brazilian city of São Paulo is its top city in number of rides. For Netflix, as well. And the list goes on. Digital services have a very wide adoption in the country, and fintech follows this trend, as well as it follows the movements of digitization in Brazil.
BayBrazil: If you could offer advice for an entrepreneur starting a business in Brazil and interested in reaching global markets, with international clients, what would you say?
Paulo: First, instead of wanting to solve everything, focus hard on the product you’re launching, and on exactly what you want to solve.
EBANX started offering boleto bancário, a traditional payment method in Brazil. And from there, the company expanded, first, by adding its first enterprise client – AliExpress and then adding other payment methods to its portfolio of solutions.
Also, it’s always good to do an MVP, starting by solving something in one market, and then moving on to expand your product/solution.
Brazil, being a unique country with many specificities, makes entrepreneurs have a different perspective of the market, so use that mindset to think about which areas of the market might be disruptive, like being creative to change something that isn’t working. It doesn’t have to be creating something for the first time, but sometimes it only takes to do something in a different way. Nobody will know Brazil better than you, you know the market’s complexities and what you can offer to foreign companies to make it easier for them to navigate these complexities and succeed in Brazil.