A New Trade Route That You Can Profit From
Cristobal Colon, better known as Christopher Columbus, reached the Americas over 500 years ago.
Ironically, he wasn’t even looking for a new world. Instead, he was trying to locate a new route for the spice trade with Asia.
Looking back, it seems a bit ridiculous that people would risk their lives in order to trade some spices. But, if you understand how humans live, then you’ll know how important trade is.
Humans are really the only creatures on earth to figure out how to delegate tasks and then live in a community. Much more can be accomplished if one person focuses on one specialty and then offers their product or service to the community.
That’s why we have specialists in everything from medicine to food preparation. We all benefit from the expertise of others.
But, if we don’t know how to properly trade our skills, then it’s all worthless.
“Countries with the most trade freedom have higher per capita incomes, lower incidences of hunger in their populations, and cleaner environments.”
The Heritage Foundation released their 2017 Index of Economic Freedom which ranks countries by giving them a score.
You can see the full graphic here.
It didn’t surprise me to see the US in 17th place, but I was surprised to see it tied with Peru.
I’m actually sitting in Peru right now. That’s why the statistic stuck out to me.
And there’s more to this…
Rewind just a little bit… I have been here for the past several days visiting some friends and getting in some surf.
I even spent Easter at the Minister of Finance’s house, just South of Lima.
(There’s of course more to this story, that I will be sharing later…)
For outsiders, Peru is mostly known as a developing nation that is home to Machu Picchu, Pisco sours (local mixed drink), and political unrest.
However, Peru is also home to some of the best restaurants in the world, a sizable mining industry, a flourishing agricultural market, and an economy that has been outpacing most others in Latin America.
Unless you have been doing business directly in Peru or with a Peruvian company, you probably wouldn’t know any of that. And that’s OK… really, there are not many opportunities unless you get directly involved somehow.
But… that may be changing…
I have noticed something almost everywhere I go around the Lima area.
Can you see anything is this picture that looks unusual?
This was a fruit stand, literally on the side of the road. A totally bare-bones business. Take a look at the refrigerator…
The most important arrows are yellow.
Now, some of you may be saying, “So what? They use credit cards. Not that big of a deal.”
But, let me tell you, it’s a BIG deal.
I saw stickers, signs, and all kinds of credit card branding everywhere. Businesses that didn’t even have running water were processing credit card sales.
And all of those signs looked new. Brand new.
I found out that all of these tiny businesses were recently visited by the banks. As in, a couple months ago.
Various banks have given everything from fruit stands to food carts the ability to make transactions using credit cards.
If you look at the yellow arrows in the above picture, you’ll see what they’re pointing to. Those are credit card processors that don’t require anything but a cellular signal, and there’s high-speed LTE coverage all over Peru.
Now here is the interesting part…
Only 30% of Peruvians have a bank account and approximately only 11% have a credit card.
But, well over 90% of Peruvians have a cell phone with internet access.
So what does that mean?
A new trade route is opening and you can profit.
Just like Columbus, you have the opportunity to use this new trade route. But you don’t even have to leave your house!
You see, one of the biggest hurdles for online sellers has been payment processing. If the customer can’t pay, then there is no business to be done.
With the increased use of credit cards in Peru (and the rest of Latin America), this virgin market is just now starting to enter the online economy.
So where is the money going to flow and how can you profit?
Here are three quick ideas for you to get involved in this new trade:
#1 Start selling! This is the most obvious opportunity. If you have a business, start selling to this new market.
*Cheat note: 56% of Peruvian internet users are men between the ages of 15-24… what will these guys buy?
#2 Invest in the banks. Why would those banks go around and give those credit card processors to all of those tiny merchants? Because they (the banks) are going to take a small fee out of every transaction. And they’re going to make a lot of money.
#3 Invest in the credit card companies. Just like the banks, the credit card companies are going to absolutely kill it.
Essentially, we’d be investing in the idea of expanding credit.
Admittedly, this can have long-term negative effects for an economy, as debt starts to pile on.
But, one only needs to look at the US economy since 2008 to see what happens when credit expands – markets go up!
