Brazilian Mobile Sector Could Halt PayPal Expansion

by Mercator Advisory Group 0

PayPal entered the Brazilian market two years ago with massive success. That success, however, has largely been based on the back of web retailers. The growing mobile market threatens to halt the growth unless PayPal adapts to provide a more effective consumer experience. The maturing mobile market still poses a number of challenges to PayPal, including limited mobile Internet access to a smartphone shortage to competition from local startups.

From a Hispanic Business article:

Eduardo Henrique, co-founder of Movile, a mobile publishing platform says, “PayPal will find big competitors in Brazil. Almost nobody sees PayPal as an option for mobile. Their product is not as good as the others.”

In Brazil, mobile is king. The country is home to 260 million mobile phones. The country’s population is 197 million, according to Brazilian telecommunications research company Teleco. While mobile payments currently are largely isolated to bills, purchasing clothes, gifts and other everyday items is the next logical step for the mobile industry, and that is where PayPal is falling behind.

Since smartphones are unaffordable for a majority of Brazilians, PayPal needs to develop partnerships with mobile carriers that can effectively provide purchasing power through one’s phone without the Internet. PayPal has started making inroads, announcing a partnership with Vivo, a Brazilian mobile company which would enable customers to use PayPal to buy prepaid minutes without having to go to the store. The only drawback of the program is, in order to buy minutes, the consumer has to use his or her credit card. But 1 out of 4 adults in Brazil don’t have credit cards.

The roadblocks presented by the mobile market in Brazil serve as a great case study. In the vast majority if not in all developing countries, mobile penetration is greater than Web access. For companies like PayPal, which rely heavily on the Internet, this fact presents problems unless adapting platforms to work on mobile devices can be achieved. Brazil is now the second largest payment country behind the United States, so following the success of PayPal in the Brazilian market will have important lessons for future ventures into emerging markets.

Click here to read more from Hispanic Business.

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