DLocal identified a niche where global companies like Amazon and Netflix struggled to accept payments in emerging markets because local payment methods, unlike Visa or Mastercard, were not universally accepted online. This B2B focus on solving complex, fragmented payment infrastructure became their core business.

DLocal's declining take rate is not a sign of competitive pressure but a deliberate strategy. The company offers discounts to large merchants to win their massive payment volumes, prioritizing Total Payment Volume (TPV) growth and market share over short-term profitability, betting on future operating leverage.

Visa's moat is threatened less by traditional competitors and more by sovereign payment systems. Government-backed networks like India's UPI and Brazil's Pix facilitate direct bank-to-bank transfers, bypassing Visa's rails. In China, state control and super apps like Alipay have effectively blocked Visa from the market.

To counter the rise of free, government-backed account-to-account (A2A) payment systems, Visa is building its own A2A network. It then monetizes these flows by adding value-added services like real-time fraud detection and global interoperability—features that basic, local bank-transfer systems cannot match, turning a commodity threat into a premium offering.

DLocal increases payment success rates with a "smart routing" system. It dynamically chooses the best-performing local bank or acquirer for each individual transaction based on factors like card type and time of day. This data-driven approach maximizes approval odds and provides a clear conversion uplift for merchants.

MercadoLibre built its payment system, MercadoPago, out of necessity in a market lacking a trusted digital payment solution. This created a powerful, integrated commerce and payments flywheel that fueled adoption and established a moat that competitors like Amazon struggled to overcome.

A key value proposition for DLocal is solving the high failure rate (often over 50%) when merchants try to process Latin American Visa or Mastercards through Western banks. Strict anti-fraud blocks cause these declines, creating a critical need for a local processing solution like DLocal's.

Entering Brazil, a market more advanced than the U.S. in some ways, required more than translation. Jeeves's growth ignited only after localizing the product to solve specific pain points, like building single-use virtual cards to address the country's high fraud rates. Brazil is now its largest market.

DLocal's predecessor, AstroPay, was a consumer-facing business. The founders pivoted to a B2B model, realizing that acquiring a few dozen large enterprise merchants was far more efficient and lucrative than marketing to millions of individual consumers with a niche use case.