Thread: Help needed E-Commerce in Panama

Hello, im trying to make an study about E-Commerce in Panama. As an starting point, do you guys know about the main obstacles to make a good working e-commerce business here for selling stuff? for example, to my understanding local banks doesn't help very much with merchant accounts for online payment thru credit cards, I'm not sure about the main reasons but I think you have to earn more than 10k on your business a month, correct me if I'm wrong. Paypal is also another problem, you can open a paypal account in Panama but to cash the money earned u need an account on a US bank. Also the post office is not the best.

Thanks for your help or comments in advance

I think the best deals are like this:

About 4 % charge on each sale + 25-35 cent transaction fee. $75-100 in monthly service fee. 5 % rolling reserve and 10-20,000 dollar time deposit.

You have to SAY that you EXPECT to obtain processing of at least 10,000 dollars per year.

Main obstacle is that it requires about 250 pages of documentation, $1500 due diligence payment and that you will have a VERY HIGH reject rate in your processing so it's best to have a backup processor in the US for example.

What does regular mail has to do with it?

Originally Posted by aqsherlock

Hello, im trying to make an study about E-Commerce in Panama. As an starting point, do you guys know about the main obstacles to make a good working e-commerce business here for selling stuff? for example, to my understanding local banks doesn't help very much with merchant accounts for online payment thru credit cards, I'm not sure about the main reasons but I think you have to earn more than 10k on your business a month, correct me if I'm wrong. Paypal is also another problem, you can open a paypal account in Panama but to cash the money earned u need an account on a US bank. Also the post office is not the best.

Thanks for your help or comments in advance

Read My Panama Lawyer: e-commerceand E-commerce Legislation in Latin America

Originally Posted by EdBowers

I think the best deals are like this:

About 4 % charge on each sale + 25-35 cent transaction fee. $75-100 in monthly service fee. 5 % rolling reserve and 10-20,000 dollar time deposit.

You have to SAY that you EXPECT to obtain processing of at least 10,000 dollars per year.

Main obstacle is that it requires about 250 pages of documentation, $1500 due diligence payment and that you will have a VERY HIGH reject rate in your processing so it's best to have a backup processor in the US for example.

What does regular mail has to do with it?

Regular mail would be the ideal thing to use because it is cheaper, obviosly if it was efficient, trustworthy, faster, etc...
Thanks for the info, im doing the study to suggest to the government things it can do to improve the situation to bost e-commerce in panama, specially for small business like change in its laws, etc.. For example those $1500 in due diligence would be great if it can be lowered, also the $10-20,000 dollar deposit you talk about but I need to identify how.

Can you please explain me more about the high reject rate? why it happens?

Thanks

The reject rate is much higher here due to Panama being tagged internationally as a high fraud risk country.

The processor requirements here are also more strict (unless you negotiate) so they will require CVV codes.

Overall moving from the US to Panama I had a 27 % reject rate. After CVV issue was cleared up reject rate dropped to about 10 %. 100 % of my sales are legit.

The main problem with Panama and banking as I see it is the lack of direct incoming wire transfers and obvious fee abuse by the banks. If Panama signs any treaties with the US, they should make sure to get direct wires (even under supervision) approved. Wire transfers in Panama today is a nightmare.

To regulate the merchant account market in Panama is a waste of time. If you force them to remove fees somewhere, they add them elsewhere. Regulation means higher costs.

The government should work to:

1. Increase competetion. Make it easier for other banks to offer the same service.
2. Improve Panama's reputation in the fraud sector internationally in general.
3. Reduce paper work requirements imposed by the government.
4. Remove intermediaries in wires and transfers to and from Panama so that e-commerce businesses can pay their suppliers efficiently.
5. Force banks to publish correct rate sheets.

If you can convince the Panamanians that it is relevant that something works 999 out 1000 times, rather than 9 out of 10, then maybe in the next 20 years Panama will have a functioning banking system that can stand on its own.

Panama works fairly ok for credit card and check payments (if you pay extreme fees to get your mail securely). For business outside US where checks are not used and not credit cards, but wires/IBAN, Panama is a complete disaster. I recommend everyone to get accounts outside Panama in Europe (with direct IBAN and SWIFT) for their corp so that business may proceed.

Summary: In Panama noone cares if it works. Make them care that it works.

Originally Posted by aqsherlock

Regular mail would be the ideal thing to use because it is cheaper, obviosly if it was efficient, trustworthy, faster, etc...
Thanks for the info, im doing the study to suggest to the government things it can do to improve the situation to bost e-commerce in panama, specially for small business like change in its laws, etc.. For example those $1500 in due diligence would be great if it can be lowered, also the $10-20,000 dollar deposit you talk about but I need to identify how.

Can you please explain me more about the high reject rate? why it happens?

Thanks

Originally Posted by EdBowers

The reject rate is much higher here due to Panama being tagged internationally as a high fraud risk country.

The processor requirements here are also more strict (unless you negotiate) so they will require CVV codes.
...
To regulate the merchant account market in Panama is a waste of time. If you force them to remove fees somewhere, they add them elsewhere. Regulation means higher costs.

The government should work to:

1. Increase competetion. Make it easier for other banks to offer the same service.
2. Improve Panama's reputation in the fraud sector internationally in general.
3. Reduce paper work requirements imposed by the government.
4. Remove intermediaries in wires and transfers to and from Panama so that e-commerce businesses can pay their suppliers efficiently.
5. Force banks to publish correct rate sheets.
[/B]

The current Minister of Finance is from the local banker class who is happy providing billion$ in back-to-back loans to Colon Free Zone companies which bring in a lot of cash to store. They see million$ in credit card processing for foreigners as high-risk activity serving tax cheats which actually increase the country risk. That is how they see it, not me.

I assume you are talking about this guy:

LA ESTRELLA ONLINE: Caso Bristol incomoda a Vallarino [Nacional]

Not sure it matters much how they see it, online credit card processing is necessary to any nation interested in moving upwards. There can only be growth in that segment.

Originally Posted by FromPanama1

The current Minister of Finance is from the local banker class who is happy providing billion$ in back-to-back loans to Colon Free Zone companies which bring in a lot of cash to store. They see million$ in credit card processing for foreigners as high-risk activity serving tax cheats which actually increase the country risk. That is how they see it, not me.

Originally Posted by EdBowers

The reject rate is much higher here due to Panama being tagged internationally as a high fraud risk country.

The processor requirements here are also more strict (unless you negotiate) so they will require CVV codes.

Overall moving from the US to Panama I had a 27 % reject rate. After CVV issue was cleared up reject rate dropped to about 10 %. 100 % of my sales are legit.

The main problem with Panama and banking as I see it is the lack of direct incoming wire transfers and obvious fee abuse by the banks. If Panama signs any treaties with the US, they should make sure to get direct wires (even under supervision) approved. Wire transfers in Panama today is a nightmare.

To regulate the merchant account market in Panama is a waste of time. If you force them to remove fees somewhere, they add them elsewhere. Regulation means higher costs.

The government should work to:

1. Increase competetion. Make it easier for other banks to offer the same service.
2. Improve Panama's reputation in the fraud sector internationally in general.
3. Reduce paper work requirements imposed by the government.
4. Remove intermediaries in wires and transfers to and from Panama so that e-commerce businesses can pay their suppliers efficiently.
5. Force banks to publish correct rate sheets.

If you can convince the Panamanians that it is relevant that something works 999 out 1000 times, rather than 9 out of 10, then maybe in the next 20 years Panama will have a functioning banking system that can stand on its own.

Panama works fairly ok for credit card and check payments (if you pay extreme fees to get your mail securely). For business outside US where checks are not used and not credit cards, but wires/IBAN, Panama is a complete disaster. I recommend everyone to get accounts outside Panama in Europe (with direct IBAN and SWIFT) for their corp so that business may proceed.

Summary: In Panama noone cares if it works. Make them care that it works.

great info! what do you think if the govt change the law to allow companies like western union, moneygram and such to open merchant accounts and compete with banks?

Hi aqsherlock,

I have been making a full time living for 8 years online.
Living in Panama for over 5. I've helped a lot of people
set up their operations here in Panama (as well as
save a lot of people the $1500 due diligence fee
because they were going to get rejected and I'm good
friends with the risk manager so he tells me BEFORE
we pay if they will get accepted or not.)

Private message me if you would like some help.

Have a great day!
Matt

If they offer merchant account services in the US yes, otherwise no.

Originally Posted by aqsherlock

great info! what do you think if the govt change the law to allow companies like western union, moneygram and such to open merchant accounts and compete with banks?