Information Technology in Colombia

Electronic Commerce

Electronic Commerce is not rampant in Colombia or in Latin America either for that matter.  Anyone wanting to provide ecommerce in Colombia must contend with the obvious low computer penetration, lack of Internet accessibility, and the per minute phone charges for Internet usage that discourages browsing and web surfing.

Beyond the physical lack of infrastructure and high cost, we also must look at the Colombian culture.  If Internet accessibility was prevalent and households had the hardware and were not charged per minute, would ecommerce suddenly increase?  Beyond the telecom limitations there are other reasons that preclude the rapid growth of ecommerce.

        Colombia is not a society of catalog shoppers like the US.   It is a "look, feel, and touch" society that is not accustomed to buying sight unseen. 

       Overall, consumer protection laws are weak.

        The postal service is not trusted and overnight delivery systems are expensive and ineffective.

        Historically, credit cards have not been used in Colombia or other Latin American countries.

While the first three points can be gradually overcome, the credit card aversion is most disadvantageous to the ecommerce situation.  On the surface, it is a positive point that Latin America is the up and coming area for credit card growth and usage.  While the initial credit card approval is akin to the system in the United States in the 1970's, Latin America, and in particular Colombia, Chile, Ecuador, and Venezuela have been taking great strides in technology to support credit card usage.

Visa has recently installed 73 satellite dishes at South American banks including ones located in Colombia.  Charge volumes are up and numbers of issued cards are greatly expanding.

However, if we look culturally into the movement into credit card usage an area that will affect electronic commerce is the issuance of debit cards rather than traditional credit cards.  Due to monetary and cultural influences, debit cards are becoming more popular in the region precisely because it is not credit and can be utilized by a greater number of the population. (23)

Both Visa and MasterCard have entered the region.  MasterCard recently released an on-line debit card "Maestro," while Visa is piloting a "Visa Cash" chip based technology stored-value card in Colombia. 

Each of these products enables the countries that promote them to gain a positive foothold within the market.  That place holds large payoffs, where 1996 charge volume for Visa reached $2.2 billion, up 51% from the previous year. (24)

The only hindrance in this quick growth rate is the lack of merchant partners.   Overall there are about two million merchants in the South American region, but credit card companies must convince both consumers and merchants to use to the cards in new places and situations such as supermarkets and gas stations.

It will not be until credit card usage reaches the mainstream market that ecommerce will flourish.  Once there is at least city-wide penetration of credit card usage and credit cards are used for convenience purchases, a greater level of cultural accessibility will be reached.  Until then, technology and telecom infrastructure will continue to grow as Colombia gradually becomes ready for ecommerce.

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Author: Heather Batyski

Last Update: December 18, 1998