With a supportive environment for online shopping and ready access to the US, e-commerce is growing steadily in South America’s second largest consumer market.
The e-commerce landscape in Colombia is a highly promising target for businesses interested in Latin America as a whole. With a consumer population of 50 million in South America’s third largest economy, the future of e-commerce in Colombia is bright. The market is increasing at an annual rate of 18% and is projected to exceed USD $8 billion by the middle of the decade.
E-commerce in Colombia still has a ways to go to catch up with overall internet penetration, suggesting significant room for growth ahead. One major factor in the development of Colombian e-commerce is a highly supportive public sector. In 2020, three tax-free online shopping holidays generated nearly USD $250 million in additional e-commerce revenue across our payments platform in Colombia. The government has also set ambitious targets for financial inclusion, which will enable more consumers to participate in e-commerce. Last year Colombia already reached its 2022 goal of 85% financial inclusion, two years ahead of schedule.
Colombia is the only Latin American country with a dedicated Ministry of E-Commerce, demonstrating the country’s eagerness to further evolve in this direction. Fashion, Electronics & Media, Furniture & Home Appliances, and Toys, Hobby & DIY make up the leading consumer categories for Colombian e-commerce.
Credit and debit cards are the preferred payment method of many Colombian customers. In addition to Visa, Mastercard, AmEx and Diners, cards issued by local banks are widely used.
When choosing to pay via direct debit customers give third parties permission to debit funds from their bank account, saving the time required to take the additional action of entering credit card data or conducting a bank transfer. This payment method is widely used in Colombia and considered to be convenient, cost-effective, and secure.
With the outbreak of COVID-19 the uptake of consumer internet banking has rapidly become a more essential aspect of payment activities. In Colombia the PSE bank transfer solution is widely used as it enables clients of different local banks to pay online directly from their trusted provider. PSE is supported by 20 Colombian banks.
Digital wallets like Apple and Google Pay account for slightly more than 12% of Colombian e-commerce transactions.
Cash payments and cash on delivery still play an important role in Colombia due to a large unbanked population. Online/offline solutions like Efecty and Via Boloto allow consumers to check out online and then pay in-person with cash at a physical location. Both payment methods are supported by PayU.
You will not require a local entity for both card and alternative payment processing (physical products excluded).
One major factor in the development of Colombian e-commerce is a highly supportive public sector. In 2020, three tax-free online shopping holidays generated nearly $250 million in additional e-commerce revenue across our payments platform in Colombia. The government has also set ambitious targets for financial inclusion, which will enable more consumers to participate in e-commerce. Last year Colombia already reached its 2022 goal of 85% financial inclusion, two years ahead of schedule. Notably, Colombia is also the only Latin American country with a dedicated Ministry of E-Commerce, demonstrating the country’s eagerness to further evolve in this direction.
Well-established connections with Miami and other ports in the southern United States help to enable particularly efficient logistical access for US e-commerce sellers to the Colombian market. At the same time, Colombia’s open trade regime reduces challenges to cross-border e-commerce which international merchants may face on other regional markets.
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