Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
Nicaragua has the lowest rate of internet access in Central America with only one-fifth of the population using the Internet, based on estimates by the Nicaraguan Internet and Telecommunications Chamber (CANITEL), although approximately one-third of Nicaraguans have internet data plans connected to their cell phone. The government has the ability to disrupt internet service at any time. During the 2018 protests, the government disrupted internet service in some cities.
Nicaraguan authorities may electronically monitor individuals’ activities. Under Nicaragua’s 2020 Cybercrimes Law, a local judge may issue an order, at the National Police or Prosecutor General’s request, to force internet providers to release specific information about an individual customer, as well as collect, extract, or record data about this customer, such as real time data traffic.
CAFTA-DR’s Electronic Commerce chapter requires nondiscriminatory, duty free treatment of digital products and encourages cooperation in numerous policy areas related to electronic commerce. However, electronic commerce is still developing in Nicaragua and there are no laws or regulations restricting its use. All eCommerce businesses must be incorporated with a physical address in the country.
The Digital Signature Law extends legal validity to electronic signatures and digital certificates to facilitate business and government transactions, especially international transactions. The governing body for the accreditation of an electronic signature is the Director General of Technology, which is part of the Ministry of Finance and Public Credit. There is no indication, however, that the system necessary to accredit electronic signatures has been implemented.
Assessment of Current Buyer Behavior in Market
Although a growing middle class promises opportunities for this modern market, Nicaragua lags in online business. Nicaragua has no legal framework regulating online transactions. While the few businesses offering online transactions generally have reliable security measures, there are no public incentives to conduct online sales and little public awareness or training available. Aside from the business elite, online shopping has not taken hold in Nicaragua.
Nicaragua’s commercial banking system is conservative and highly concentrated, restricting electronic transaction options. According to online marketing experts, commercial banks ask for up to $10,000 in security deposits to guarantee online transactions. Some entrepreneurs use Pay-Pal and other foreign payment systems to avoid high transactions costs, but these systems are not integrated into Nicaraguan banks. Because Nicaragua lacks a modern national mailing system, Nicaraguan online stores have been slow to adopt home delivery, although that trend has shifted as businesses adapted to delivery to maintain sales. Purchase and delivery platforms such as Hugo, Jumpers, Piki, and Get My Stuff! have exploded in the capital of Managua, although these services are so far primarily focused on the restaurant and groceries industry. Stores that deliver primarily cater to the upper and business classes, which constitute a minority of the population.
Another major constraint is the size of the national market, which is still small and for the most part does not have the purchasing power to obtain credit or debit cards often needed for online purchases. According to the World Bank’s global financial inclusion database (Global Findex), only 31 percent of adults had access to financial services in 2017 in Nicaragua.