Why Zuora integrated with EBANX in 2024
Hi there,
Today we will be talking about the new partnership between Zuora and Ebanx. But first, if you missed my last email regarding the Pagos co-pilot, please read it here along with the co-founder's comments.
What's happening
Zuora has integrated the Ebanx payment gateway and this is an interesting partnership from various perspectives.
Zoom in
Zuora has a variety of payment integrations already, but Ebanx is not just another payment provider. The new integration with Ebanx supports international card networks and a PIX, a local and rapidly growing payment method in Brazil.
Bigger picture
If a business is located in the US/EU and wants to accept payments from international customers, there are multiple models to do so:
Cross-border
Local acquiring
Merchant of record
Let's discuss each of them.
Cross-border payments
Most of the payment providers offer cross-border payments via international card networks. Cross-border payment configuration is easy to implement, but there are multiple limitations:
Low success rate: Issuing banks tend to decline transactions initiated overseas.
Higher fees: Merchants have to cover cross-border and currency exchange fees.
Lack of local payment methods: Cross-border merchants usually do not have access to local payment methods.
Local acquiring
Businesses have an option to register a company in the countries where their customers are. Adyen, Stripe, Worldpay, Worldline, Nuvei, and others support local acquiring in multiple regions.
Local acquiring offers advantages over cross-border transactions as the processing and payouts occur locally through a domestic merchant bank account. However, local acquiring is not widely favored among medium-sized merchants due to the following reasons:
The necessity to establish local businesses and open local bank accounts becomes particularly challenging for merchants operating in multiple countries. For example, to enable local acquiring in Latin America, merchants would need to open entities in Mexico, Brazil, Argentina, and other countries.
The requirement to manage multiple merchant accounts leads to increased operational overhead.
Merchants need to comply with local regulations. For example, in some LATAM countries (Argentina and Brazil) there is a local regulation to collect a tax ID (local SSN) on a checkout page and send it to a payment provider.
Merchant of record
The merchant of record model allows merchants to enjoy the benefits of local acquiring without opening a local entity. Merchants still need to comply with local regulations though.
Why LATAM
Enabling a merchant-of-record model and local payment methods in Latin America can be a great strategic move for many digital services in 2024. Many experts report on subscription fatigue, as many customers cancel their subscription services. This is a time, when many merchants are looking for new ways to acquire customers, and Latin America is recognized as having significant potential.
This is where the merchant of record model offered by Ebanx becomes very handy.
Integration platforms VS all-in-one solutions
Zuora is a billing platform that decouples billing and payment services. With this setup, merchants can benefit from a multi-gateway configuration and utilize multiple providers for local and international payments.
On another note, Stripe recently invested in integrating a wide variety of local payment methods. Just look at this page for all the payment methods supported by Stripe. However, in the case of Latin America, the merchant of record model is the most effective way to enhance payment acceptance.
What's next
I expect that partnerships between billing platforms and local payment providers will continue to grow, as the demand for accepting international payments is only increasing. I also anticipate new partnerships to expand international growth in other regions such as APAC, EMEA, and the Middle East, similar to what we are seeing in LATAM.
Other news / good reads
Stripe leads the way to Q2 fundraising recovery [paymentsdive]
Why Online Payments Fraud Continues to Grow [paymentsjournal]