https://www.investors.com/research/the-new-america/how-this-…
PagSeguro Digital (Secure Pay), may be the Square of Brazil. While there are big players in the credit-card-swipe space, PAGS is changing the playing field in several ways. First, they are focusing on micro-merchants, second they sell their device for about $264, while the big boys (all owned by banks) rent their devices for $55/month. (PAGS will give you a 12 month loan, which works out to around $25/month, but not forever like a rental)
About 75% of PAGS’ customers never even took credit cards before. It seems that once on merchant sees the increase in his sales, others hear about it and join up, so lots of free word-of-mouth marketing. PAGS sells the swipe devices at cost, but makes money on fees and loans. Unlike the US, credit cards can take up to 30 days to transfer money from the purchaser’s account to the merchants account -no wonder so many small merchants didn’t take credit cards. PAGS gives them a loan and collects interest until the money shows up. This is also the biggest risk for the company - if Brazil changes the rules from 30 days to a few, a lot of income could dry up. And Brazil is making meaningful reforms in their economy. (Hmmm, maybe time to buy some kind of Brazil ETF).
Customer spending has surged thanks to record low interest rates, slow inflation and falling unemployment (hmmm, Brazil ETF again).
PagSeguro intends to set it self apart with a digital payments ecosystem
That sounds like Square.
The big players in this are owned by banks, which may pressure customers to buy more bank services, thus increasing costs. Many of PAGS’ micro-merchant customers don’t even have bank accounts.
“Merchants gain access to more than 30 cash-in methods, business management tools, prepayment of credit-card receivables, accounting reconciliation, and shipping solutions,” Kuri said in a note to clients
PAGS recently IPO’ed at about $2.27B
Pete, who finds this quite interesting.