Operating high-ticket sales in Latin America efficiently

Several global brands, especially B2B companies, depend on high-ticket sales. The problem is that, by relying on international SWIFT transfers, they waste time, have poor traceability, and can face burdensome bank fees and hedging issues.

The challenges mentioned above can be even more significant in regions such as Latin America (Latam). Despite its booming economy and burgeoning digital commerce market, the local customer preference, financial scenario, and local rules and regulations can be very challenging. What to do, then?

Get ready to discover the high-ticket digital market in Latam and how to operate it! We will discuss the high ticket concept, market potential, and hints to sell more in the region.

Sit back and enjoy the reading!

What are high-ticket sales?

High-ticket sales refer to the process of selling products or services that have an elevated price point. These are typically high-value items or services that require a significant investment from the buyer. Some examples of high-ticket things include SaaS applications, luxury goods, high-tech gadgets, B2B software, travel services, and high-value consulting services.

It might sound fortunate to accept a heightened amount of money in one transaction. However, selling products or services that start in the hundreds and top out in thousands of cash requires running a robust and reliable payment strategy. 

The opportunity in Latin America

The Latam digital market has become one of the fastest-growing worldwide, and its evolution will likely continue. Since high-ticket sales are also part of it, that shows how attractive this market is for brands that depend on this revenue model. Having Brazil and Mexico as the most dynamic countries, the whole region indicates a hypergrowth of 30% every year until 2025.

Latin American digital demand: A double-digit growing market

When we look at some high-value industry examples, projections are also very optimistic for Latam. Here’s a proof with some interesting data:

• Technology: The technology industry in Latam has been growing rapidly in recent years, focusing on software development, artificial intelligence, and cloud computing. According to a report by IDC, the total spending on information technology (IT) in the region was USD 150 billion in 2020 and is projected to reach USD 167 billion by 2024, growing at a CAGR of 2.9%.
• Travel and tourism: The total contribution of travel and tourism to the Latin American economy was USD 343.6 billion in 2019. The industry is expected to reach pre-pandemic levels by the end of 2023, as it was expected to expand 28% in 2022. (Source: World Travel & Tourism Counsil)
• Luxury goods: The luxury goods market in Latam was valued at USD 21.1 billion in 2021 and is projected to reach USD 25.4 billion by 2025, growing at a CAGR of 4.7% (Source: Euromonitor International).
• Real estate: The house price index in Latam increased by 6.63% in 2020. Brazil saw an increase of 9.24%, while Mexico rose 3.34% (Source: Global Property Guide).

What are the prime reasons behind Latin America’s potential?

The prior bases for this accelerated blossoming high-ticket digital market include the expansions of digital services in the region, such as SaaS companies, which have been gaining colossal investment from venture capital. Also, remote work combined with a high internet penetration rate has contributed to the digital transformation of the Latin American landscape. 

In addition, many Latin American businesses are increasingly adopting AI-enabled Cloud and SaaS solutions to improve processes and enhance customer experience. The software market in Latam rapidly expands due to accelerated digitalization leading to higher SaaS demand.

These factors combined upshots in a promising and fortunate context. Global B2B tech companies can find a powerful and profitable ground here — but only if the challenges blocking their growth path are known and surpassed.

Processing high-ticket transactions in Latin America

High-ticket sales typically involve a longer sales process and require a greater level of trust-building with the potential customer and a more personalized and consultative approach to selling. Salespeople specializing in high-ticket sales in Latam often work closely with customers to understand their needs, offer customized solutions, and build strong relationships that can lead to repeat business and referrals.

Since Latam is home to a diverse and mixed-up population, its culture, customer preferences, and payment behaviors have many particularities. Global B2B tech brands and other companies that depend on high-ticket sales in Latam usually face a manual, complex, expensive, and slow process that prevents scalability and performance optimization. 

It’s usual to witness multinational businesses coming to Latam and charging their clients in foreign currencies, such as USD. They also rely on international SWIFT transfers, that only waste time, have poor traceability along the process, and pose burdensome bank fees and hedging issues. What’s the solution, then? Having a robust payment strategy composed of diverse local payment methods.

Here are also four measures to ensure you count on your payment system to make the most of high-cost processing:

1.Payment Offering

The number of default options for accepting payments is limited for enterprises processing high-value transactions. Thus, any company willing to sell a high-ticket product or service needs to choose a provider with a wide and diverse range of local payment options in Latam.

How does Latin American B2B business prefer to pay for a product or service?

Cash-based payments and Pix are the main methods of B2B digital payments in Brazil

Source: Netscribes, 2021

• Cash-based payments: The most common form of payment with 70% market share and is heavy-adopted by local tech companies to facilitate cash transactions. These include Boleto in Brazil, OXXO in Mexico, Via Baloto and Efecty in Colombia, and ServiPag in Chile, among others.

• Bank transfers/PIX: Direct bank transfers (or invoice payments) are the preferred method for SaaS in the case of high-ticket purchases, especially in the B2B high-ticket sales industry. Pix has been replacing other bank transfer forms in Brazil, winning a significant market share. The perfect example of a rapid payment preference shift that players must stay on top of.

• Credit card: This is the third most popular payment method for tech B2B companies, generally used for low-value tickets. 

• Installments — one of the most popular ways for B2B and B2C customers to pay for high-priced products or services in Latin America. Installments are a method enabled through credit cards where the buyer is offered payment plans, with or without interest fees, that allow them to pay for a purchase over the course of months or years while sellers receive the funds all at once.

 2. Recurring payments: The key to performance optimization

Companies that have a subscription business model and need to process high-cost transactions must continuously sharpen their recurring machine in Latam. Thus, having a diverse payment mix beyond credit cards is crucial to maintaining an effective strategy based on recurrence.

Recurring payments are the key for:

• Speed up transactions; 
• Save time;
• Take some guesswork out of budgeting. 

Learn more about the secret to high approval rates on recurring payments

3. Financial and reconciliation management

High-value processing isn’t easy and cost-efficient to manage. Here are some recommendations for streamlining the process:

• Save time with automated processes: Processing high-value transactions sometimes means losing time with manual reconciliation. Having all the information centralized to monitor transactions in real-time will enable you to automate internal processes and save your team’s time. 

• Charge in local currency and receive in USD: Establish a clear connection with your Latin American customers and charge them in their local currency. A local payment provider in Latin America will allow you to collect your customers’ payment amounts and taxes in the local currency and remit your funds in USD, always compliant with local regulations. 

• Stay ahead on price negotiations with currency hedging: Exchange rate fluctuation is a pain for foreign companies, especially in Latam. Removing this hardship is possible when operating with a payment provider that offers fixed FX rates, increasing the chances of winning a new deal or renewal.

4. Fraud prevention

Even though fraud is still one of the main challenges to digital services in Latam, the opportunities are worth more than the risk. Tailoring a fraud prevention strategy for high-ticket sales in each country in the region is vital to success.

To reduce the risks, multinational businesses must apply protection rules and anti-fraud tools to their whole transaction process, such as:

• Machine learning for behavior scoring
• Chargeback guarantee
• Block and trust lists to avoid blocking trusted clients
• Validation scheme with payment capture to acquirers and banks’ validation
• Manual reviews to reduce false declines while preventing fraud
• A/B testing
• False-positive measuring
• Device fingerprint

Managing high-cost transactions in Latin America doesn’t need to be a headache

Latin America presents unparalleled opportunities for global brands that depend on high-ticket sales. Despite the challenges, the key takeaway is choosing your business partners wisely in the region, especially who is going to be your payment provider. The good news? You’ve just found it!

EBANX was founded in Brazil and has more than 10 years of experience in Latin America and other growing markets around the globe. We know all the challenges faced by global companies willing to expand in the region and help them thrive with our unique expertise.

When it comes to high-ticket sales, we have a special solution tailored for this revenue model. Are you ready to take your business to the next level?

Discover EBANX High Tickets solution