Exclusive: PayPal Reveals Its New Colombia Strategy & Embrace Of Small Exporters

2015 was an eventful year for PayPal in Colombia. Just a month after announcing it was re-evaluating its operations in Colombia, and ceasing domestic payments between users, it turned around and announced an exclusive agreement with Colombian bank Davivienda geared towards merchants.

Finance Colombia’s executive editor Loren Moss sat down briefly with Arnoldo Reyes (above), PayPal’s head of financial services for Latin America & the Caribbean, to discuss PayPal’s thinking on Colombia, how it sees the market, and the rationale behind recent maneuvers.

Finance Colombia: In 2015, PayPal, made the decision that it was going to change the way that it operated in Colombia. Was the pending deal with Davivienda part of that decision to restructure the way that PayPal operates within Colombia?

Arnoldo Reyes: No, it wasn’t actually. The principal reason for which we changed our terms and conditions, which basically as a result of that change, was we limited or we actually eliminated the domestic transactions inside Colombia and PayPal users. The reason why we did that, was we took a step back and we looked at where the market opportunity really was, or where Colombians were needing PayPal the most, and it happens to be in cross border purchases.

And when we looked at the current product that we have, obviously we have 26 currencies our platform, operating for 26 currencies, but we don’t offer Colombian pesos, so we were realizing that we weren’t really delivering the best experience in Colombia, because if you were, let’s say in Bogota and you were selling, I don’t know, a pair of shoes on your website and the buyer is someone in Cartagena, you were basically forced to make that transaction in dollars and for Colombians at a domestic level, they don’t use dollars for e-commerce, they use Colombian Pesos and that’s really the principal reason that we said: you know what, let’s focus on cross-border, which is where our customers are telling us we are most interesting and we need PayPal, as opposed to domestic transactions.

We took a step back and we looked at where the market opportunity really was, or where Colombians were needing PayPal the most, and it happens to be in cross-border purchases.

You know at some point in the future, as the domestic e-commerce market grows and we are able to provide the services that really complement that market, then we can certain revisit that and see if there is an opportunity to serve our customers that way.

Finance Colombia: PayPal is used very commonly by friends and family to send money back and forth. Will PayPal users in Colombia no longer be able to do that? If someone is in the USA and wants to send money to somebody in Colombia, is that still not possible?  And if not, is there a reason why that large part of PayPal is not available?

Arnoldo Reyes: No, actually the only thing we canceled from our service was for PayPal users, both of them are in Colombia, to buy and sell; or if you want to think about money in Colombia, because we don’t have Colombian pesos. But we still offer cross border solutions, so if friends and family in the US want to send a payment to friends and family in Colombia, that’s absolutely possible. That transaction is done in dollars and through the partnership that we did with Davivienda, now when a person receives that money in Colombia they can withdraw those funds locally through Davivienda.

Finance Colombia: Is that only available to merchants or is it available to individuals?

Arnoldo Reyes: The solution is very much targeted towards merchants that export because really that’s where most of the demand is, honestly. And that’s the reason we decided to built this partnership, because as you know, Colombia has been expanding its free trade pacts over the years there is a trebling entrepreneurial ecosystem. Colombia is now exporting everything from software to consulting services. I mean across borders—most of those opportunities are across borders so we really wanted to focus on merchants and Colombian businesses that are exporters.

Now, the definition of merchant is very broad and that’s why we believe that we have a very flexible platform. You know, I met a customer in Colombia that is a consultant, that works as a sole for proprietorship, an individual and they do consulting projects for a company in Texas or Ohio, or wherever, they can absolutely use PayPal and maybe that person doesn’t really have a company set up, it’s just that professional; and we also cater to the biggest companies you can think of, from airlines to many more big and established companies.

So really, I don’t want to limit it to merchants, it’s really about whether individuals or companies are exporting something out of Colombia. That is really the market that we want to want to help succeed.