In a part of the world just starting to open up to e-commerce OmbuShop is one of the first online shop platforms in Latin America.

I spoke with co-founder Ernesto Tagwerker over coffee in Buenos Aires over the challenges and opportunities facing them. In particular with an interest in payments.

Tell us briefly what OmbuShop is?

OmbuShop allows people in Latin America for the first time to create a simple on-line store and easily accept payments for their products.

Designers love us as our shops are fully customizable down to the pixel level.

Which countries are your primary focus?

We are currently targeting Argentina, Chile and Mexico. Future markets are Colombia and Brazil. We would also like to eventually expand outside Latin America.

Who are the partners and background?

My partner is Lucas Mourelle who is a very respected graphic designer here in Buenos Aires. He designs both our site and the various pre-designed themes we offer our customers. He is also working on our designer partner program.

I am a software engineer, programmer and lean practitioner. I primarily work with Ruby on Rails and Javascript and like to contribute to the Ruby and Lean Startup communities in Buenos Aires. I co-organize Rubyconf Argentina and the Lean Startup meetup BA.

Are people in Argentina used to buying on-line?

Consumers here have been buying on-line for years, but primarily through Mercado Libre which is Latin America’s answer to Ebay. This has meant going to the sellers place to pick up the goods and pay in cash.

People are not really used to the Amazon like shopping system, where you pay on-line and have the goods delivered.

Thanks to the daily deal sites and online private sales clubs though people are starting to change their habits. People are now starting to buy more online.

Shipping is actually also somewhat of a problem here. We only have one private courier company OCA with an API. The national postal service is also not trustworthy enough to be used for shipping.

What challenges do merchants face in Argentina charging on-line?

The biggest challenge is that most people don’t have or use credit cards.

Instead the most popular form of payment are through agency based systems such as RapiPago and PagoFacil.

When you buy with these systems you receive an invoice number from the shopping site. You take this and go to the agency which could be a news stand or a counter in your local supermarket and pay with cash there.

It is pretty easy for merchants to start charging using these kinds of systems through DineroMail our primary payment gateway. To accept international credit cards though through them, you need to complete a second step.

Alternatives in Argentina are MercadoPago, the payment arm of Mercado Libre and PayPal. PayPal is not very popular here. MercadoPago is more expensive, but some merchants feel they have better tools.

MercadoPago charges 5.99% per transaction, while DineroMail charges between 3.99% and 4.99% + AR$1.50 (~US$0.34).

MercadoPago and DineroMail both operate through either an embedded iframe or a PayPal like redirect to their site.

If you need to have customers enter payment details directly on your site or get better rates there are a few traditional Credit Card payment gateways but you need to make your own agreements with MasterCard, VISA etc. It is a very long procedure. You also will need to be PCI compliant.

Do you partner with a payment gateway?

While we don’t partner specifically with a payment gateway, we currently integrate with DineroMail. Customers are asking for MercadoPago and PayPal so we will be adding them soon.

What are the most common ways that consumers pay in your shops in Argentina?

RapiPago and PagoFacil are by far the most popular way that consumers buy through our shops. We have noted though a steady growth in Credit Card payments over the last year.

Are Argentina’s currency controls affecting your business?

Not really. Our merchants haven’t experienced major problems buying merchandise from abroad. People here are still buying and like being able to buy through local on-line shops.

What is it like starting a new internet business in Argentina?

Buenos Aires has really good infrastructure. The city government are doing a lot to make it attractive to start businesses here.

The startup community is strong and growing, we have lots of meetups where we exchange ideas and experiences. There is also a strong community of both designers and developers here that we can count on.

There are so many opportunities here. I love the challenge of starting a new kind of business here. It’s really exciting to be able to help so many people start businesses.

We’re not only helping the merchants get started, but also creating new revenue streams for our talented design community.

Through our partner program we are offering designers a large commision and a much easier way for them to help their clients.

Are you funded or bootstrapped?

We are 100% bootstrapped through my savings and our sales. We are not yet ramen profitable but should be soon. We are seeing good steady growth month by month.

We would be interested in funding, if we feel it would help us serve our customers more. But we are doing fine as is.

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