April 2011 - GlobalCollect has kicked off a series of webinars to take a closer look at the ins and outs of emerging markets by zooming in on the BRIC countries, as those boast double digit growth numbers and thus offer tremendous potential for e-commerce opportunities. Both the presentation and video will give you the necessary background to devise a winning payment strategy in each BRIC country. Throughout the rest of the year, we will follow up with further webinars on emerging markets that will take an in-depth look at individual countries and specific verticals – so stay tuned via http://www.globalcollect.com/payment-service-provider/Knowledge-center/

1. Payment strategies in BRIC
Presented by:
John Snoek
John.snoek@globalcollect.com
Product Manager
GlobalCollect

2. BRIC Webinar Program
• BRIC program
• Helicopter view
• In-depth per country in next webinars
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3. Why?
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4. Why?
GDP/capita Internet
Country Population Growth (%)
(USD) Users
203 Mio 10,900 7.5% 76 Mio
139 Mio 15,900 3.8% 60 Mio
1,189 Mio 3,400 8.3% 81 Mio
1,337 Mio 7,400 10.3% 457 Mio
Source: CIA – The World Factbook | Internetworldstats.com
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5. Why?
E-commerce volume in Billion USD
51,0
2009
E-commerce growth
2010 36,4
2008  2009 2009  2010
Brazil 39% 40%
Russia 28% 35-38%
India 30% 50%
8,9
6,2 6,7
4,9 China 39% 38-45%
2,3 3,5
Brazil Russia India China
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6. Central themes
BRIC: Appealing but challenging
Local alternatives up to 30%
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7. Framework
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8. Similarities
• Relatively closed economies | High E-com growth
• Government/central banks dominant
• E-com infrastructure less advanced
• E-com barriers (e.g. legal, repatriation)
• Higher fraud & chargeback rates (BRI)
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9. Differences
E-readiness (EIU - 2010)
Business Social and Legal Government Cons. & Bus.
Country Overall score Connectivity
environment cultural environment policy and vision Adoption
Brazil 5.27 3.60 6.66 5.73 6.10 5.70 4.93
China 4.28 2.65 6.36 5.40 5.20 4.60 3.11
India 4.11 2.15 6.27 4.67 5.60 5.10 2.88
Russia 3.97 3.85 5.72 5.13 3.65 3.00 3.01
USA 8.41 7.35 7.85 9.00 8.70 9.25 8.60
Debt vs. savings
Country GDP/capita (USD) Debt % Savings Credit cards Debit cards Inhabitants cc/capita dc/capita
Brazil 10,900 35% 17% 191 233 194 0.98 1.20
Russia 15,900 13% 26% 10 119 141 0.07 0.84
India 3,400 12% 24% 24 130 1189 0.02 0.11
China 7,400 17% 47% 199 1800 1337 0.14 1.29
US 46,400 136% 7% 686 488 310 2.21 1.57
Sources: creditcards.com | CIA factbook | 9

10. The playing field
Setting up shop
1.  Conversion  Alternative payment 
2. Local collection  Resident bank account
3.  Entity  Admin and operational cost
4. Type of entity determines how to repatriate and how it is taxed
• Local regulation of various industries (e.g. telco, travel)
5. Logistics
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11. The playing field
Taxes and repatriation
• Tangible or intangible?
• Customer = consumer or business?
• VAT and withholding tax!
Capture relevant data in checkout process
Frequency of reporting and FX trade-off
Operational impact + currency exposure vs. cash flow
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12. Brazil
“Craving for credit”

13. Brazil – The payers
Country GDP/capita (USD) Debt % Savings Credit cards Debit cards Inhabitants cc/capita dc/capita
Brazil 10.900 35% 17% 191 233 194 0,98 1,20
• Installments (“parcelas”)
• Not everyone has a card or gets credit
• Cash or cards
• Relatively high # of chargebacks

14. Brazil – The players
Cards Banks Alternatives
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15. Brazil – The players
Market share online payment methods
The star
• Boletos – Bank scheme
Cards
60%
– push payment using barcode
(via online banking, bank branch, check or ATM)
Boletos
– No consumer charge 30%
Bank
The contenders Others transfer
5% 5%
• Mercadopago & Dineromail
Continuous high growth in last 3 years
– Various funding sources
• Débito Online
– Real-time banking
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16. Brazil – Pick your team
Payment methods
Digital Physical Travel
Cards +++ +++ +++
Boletos ++ ++ +/―
eWallets ++ ++ ++
Bank transfer + + ++
Mobile + ― ―
Reversible? Moneyback refund Recurring
Boletos No (except when paid by check) No No
eWallets No Yes No (being developed)
Bank transfer No Yes No
Mobile Yes Depends on carrier Depends on carrier
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17. Brazil – The gameplan
• Local BT + eWallets + Boletos = avg.  of 25-35%
• Your industry requirements (tax!)
• Local entity | Capturing consumer data
• Use third party for FX and repatriation
– BRL cannot be repatriated
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18. Russia
Cards are the alternative
MRC 2010 Semi-Annual Platinum Meeting
and 10th Anniversary Celebration
Austin, TX | October 1

19. Russia – The payers
• Cash lovers – Distrusting banks (1998)
• Prefer eWallets for online as cash substitute
• Majority online purchases = digital
• Travel up 500%
• Many cards not enabled for online
• Cross-border payments growing
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20. Russia – The players
Cards Banks Alternatives
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21. Russia – The players
The stars Which online payment method do you
prefer?
• Yandex (eWallet) 70%
– #1 FOP | RUB only
45%
38%
2008 2009
• Webmoney (eWallet) 10% 12% 10%
8% 7%
– #2 FOP | Multiple currencies
(Webmoney Gold)
Cash on E-money Credit card Bank transfer
delivery
Source: Romir – 2009
The contender
• Qiwi (ATM cash-in/eWallet)
– Largest network of ATM‟s
– 80 Million users a month
– Funding source for eWallets, VISA prepaid or direct payment 21

22. Russia – Pick your team
• Preferred payment methods
Digital Physical Travel
Yandex +++ +/― +/―
Webmoney +++ +/― +/―
Qiwi ++ ― ――
Cards + + ++
Mobile +++ ― ―
Reversible? Moneyback refund Recurring
Yandex No No Yes
Webmoney No Yes (time limit) Yes
Qiwi No Yes (to wallet) No
Mobile Yes Depends on carrier Depends on carrier
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23. Russia – The gameplan
• Yandex , Webmoney & Qiwi = average increment of 40-50%
– For ATV < USD 500
– Travel = cards | Physical goods ► „see first then pay‟
• Setup local entity + tax passport
• Non-resident is possible, but:
– Settlement up to 30 days
– Not all local vendors/acquirers
• Use third party for FX and repatriation
– RUB cannot be repatriated
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24. India
“Waiting for the giant to awake”

25. India – The payers
• Online buyers situated
in metropolitan areas
• 85% shoppers aged 15 – 35
2015: 65% of population aged 15 - 35
India consumer trends research: Mint in cooperation with Komli
Media - 2009
• Mobile penetration (600 Mio vs. 81 Mio Desktop)
Source: IAMAI: “Digital Commerce” – March 2011 25

26. India – The playing field
• Logistics
• Two-factor authentication for CNP
• Success rates declined
• Since Feb 2011 also for mobile/IVR transactions
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27. India – The players
(Base: 7.5 million Active Internet Users who have made online purchases)
Source: IAMAI: “Digital Commerce” – March 2011
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28. India – The players
Market shares - IRCTC
Reserve Bank of India (RBI)
Other
The star 14,8% Cards
24,5%
• Indian banks via net banking Cash cards
– ICICI, SBI, HDFC 16,9%
Net
The contender banking
43,8%
• Mobile (Obopay, Paymate, mChek)
– carrier billing, linking card or bank account
Source: IRCTC (Indian Railway) –
accounts for 25-30% of online payments in India
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29. India – Pick your team
Digital Physical Travel
Cards ++ +++ +++
Netbanking +++ +++ +++
Cash cards ++ ― ――
Mobile +++ + +
Reversible Moneyback Recurring
(refund)
Netbanking Yes Yes Yes
Cash cards No Yes No
Mobile Yes Depends on Depends on
carrier carrier
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30. India – The gameplan
• Net banking, Cash cards and mobile = average increment 20%
• Mobile?
• Local entity (Direct connections or via PSP)
• Trust ► Checkout pages IRCTC (trusted)
• Use third party for FX and repatriation
– INR repatriation very limited
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31. China
Growing to the top

32. China – The payers
• Cash (COD) first and foremost # of shoppers paying online
140 128
120
100 94
• < 35 more prone to credit and 80
Millions
buying online 60
40
20
0
• Group shopping (19M users) December 2009 June 2010
Source: CNNIC “ Statistical Report on
Internet Development in China “ | July 2010
• Transaction limits per consumer
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33. China – The players
Cards Banks Alternatives
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34. China – The players
The stars
• China Union Pay (CUP)
• Alipay
The contenders
• Tenpay (part of Tencent)
• Mobile (202% YoY)
303 M mobile internet users
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35. China – Pick your team
Digital Physical Travel
Cards +++ +++ +++
Alipay +++ ++ ++
Tenpay ++ ++ ++
Mobile +++ ― ―
Bank transfer + + +
Reversible Moneyback Recurring
(refund)
Alipay No Yes (not realtime) No
Tenpay No Yes No
Mobile Yes Carrier dependent Carrier dependent
Bank transfer No Yes No
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36. China – The gameplan
• Alipay & Tenpay ► average increment of 30-40%
• Mobile?
• CNY repatriation not possible
– Setting up entity in China cumbersome
• Taxes approximately 30%
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37. Summary

38. Summary
• Markets and product functionality less mature
• Seek local tax and legal advice
• Adapt checkout process  capture necessary data
• Reporting requirements
• Website in local languages & customs
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39. Summary
vs.
Match your business with FOPs that support your needs
(e.g. pricing, refunds, recurring, delayed settlement)
Trust, transparency and clarity
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40. Watch this space

41. Next Webinars
“Brazil in-depth”
http://www.youtube.com/watch?v=lp8d0Pb6UY
By Daniel Belda 0
Product Manager
GlobalCollect
“Gaming in BRIC”
To be announced next
week
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42. Perseverance
http://www.youtube.com/watch?v=lp8d0Pb6UY
0
http://www.youtube.com/watch?v=lp8d0Pb6UY0
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