Acquiring an Entry Strategy with Innovation and Differentiation in Brazil and the United States

With the global rise of credit and debit card usage, acquirers play an increasingly important role within the payments industry by processing these types of payment transactions on behalf of merchants. This study focuses on examining two markets – Brazil and the United States – by providing an overview of the market dynamics, the state of the competitive landscape, and the role and impact of regulations and new technologies. In considering these factors, strategic recommendations are provided for new players interested in entering either market. Further, factors, such as existing and future opportunities as well as risks, are considered.

The student team directly advised a payment firm that ArpexCapital recently launched. The Brazilian market is dominated by Cielo and Redecard which control 95% of the market. Recently, there had been regulatory reform to create a more competitive market in the credit card industry by the Central Bank. In conjunction, market leaders have older legacy systems and costly infrastructure that would make it difficult for them to evolve around the new market developments. With these developments, ArpexCapital believed that this is an opportune time to attain market share in not only Brazil, but also in the United States. There had been a steady entrance of new players to the Brazilian market such as sub-acquirers and ISOs, who are taking business away from the existing players. The strategic focus in relation to the Brazilian market had been mobile payments, internet gateways activities and sub-acquirers. The strategic focus for the research in relation to entering the United States market had been the introduction of the EMV –chip payment card.