World Bank subsidiary IFC has agreed to invest $7 million in a Latin American e-payment solution vendor, SafetyPay, as part of its program designed to bolster e-commerce in emerging economies.
Latin America has a fast growing e-commerce market. Total online retail sales in the region grew from $8 billion in 2006 to $43 billion in 2011, with an average annual growth rate of 41%, according to the World Bank.
Yet only a few percent of people seems to carry a credit card in the region. “In many developing countries people do not have access to credit cards and have—until recently—not been able to make online purchases,” says SafetyPay CEO Manuel Montero.
The World Bank believes that e-commerce may increase competition among retailers and thereby bring down the prices of consumer goods.
SafetyPay enables people to purchase online without requiring them to use their credit card. The company says banks in the region can use its solution to offer e-banking services and generate additional revenue.
“With the financial support of investors such as IFC, we are continuing our aggressive growth strategy to partner with banks and companies to give more consumers in Latin America access to our services,” Montero added.
SafetyPay, headquartered in Florida, was launched in Peru in 2007 and is active in Mexico, Costa Rica, Brazil, and Colombia. The company currently has partnerships with 84 banks in Latin America, and with many of the region’s leading firms, including Groupon, Peruvian Airlines, Volaris Airlines, and Despegar.
“Online commerce increases price transparency, lowers transaction costs, and enhances export opportunities,” said Kent Lupberger, IFC Global Head of Telecommunications. “SafetyPay is playing an important role in giving more people access to online commerce.”
IFC has increased such investments over the past few years. Given its own website, the bank invested more than $20 billion last year.