The Latin American Payments Blog

Brazil’s Thirteenth Salary And What It Means For Your E-business

Brazil's Thirteenth Salary

Set Your Business Apart

It’s no secret that e-commerce as an industry is booming around the world. With the advent of drop shipping and marketplaces online, more and more players in the e-commerce field are cropping up. However, it doesn’t mean all will be successful. It is a competitive landscape full of players competing head to head, and usually on price alone. So it’s becoming increasingly important to set one’s e-business apart in one or another to make a real profit.  One way to do so is by focusing not only on what you are selling but when. That’s why Brazil’s thirteenth salary is such a good opportunity.

The Dates To Look Out For

If you want to maximize your e-commerce potential, it will not be enough to have a digital storefront. Through which to sell your products. You will also need to pay particular attention to the dates when consumers are primed to buy more.

These select dates, such as Mother’s Day, Valentine’s, Black Friday, and the Holidays, signify substantial upticks in online purchases across the world. Last year, online sales topped 126 billion dollars in the US alone. Expected worldwide sales for 2019 will climb 17% to top 4.26 trillion dollars.

This is certainly no exception in Latin America. In fact, governments in many countries in LATAM have decided to offer special payment schedules to workers. This is to help them meet the financial demands of these times of the year. 

Colombia, for example, Mid-June signifies a notable rise in online purchases. This is since employers pay the “Prima de Servicios,” a sort of social benefit stipend mandated by the government. They do this to give citizens a monetary boost for summer expenses. Around July, Ecuador experiences the same uptick in e-commerce traffic. This is due to the government paying a similar stipend to the citizens.

One of the region’s most notable cases of a government-mandated monetary stipend is Brazil’s famed “Thirteenth Salary.”

Thirteenth Salary in Brazil – What It Is And How It Works

The Thirteenth Salary in Brazil is a constitutional right guaranteed by the Brazilian Constitution law. This law consists of the mandatory payment to all public and private employees equal to an extra monthly wage.

The idea for a thirteenth monthly salary was born in the year 1962, when the then-president Joao Goulart, popularly known as Jango, approved and made mandatory throughout the country the payout of a Christmas “gift”. Representing one-twelfth of a yearly salary. Retirees, pensioners, and even temp workers have a constitutional right to receive their thirteenth salary.

The intended purpose of this so-called thirteenth salary was ensuring all of the country’s workers had enough money to be able to do a more thorough round of Christmas shopping. A direct result of the population having more money around the Christmas Holiday season is that the economy is given a significant boost through the sudden influx of capital, an increase in sales, and tax collection.

How Do You Calculate Brazil’s Thirteenth Salary?

The exact monetary value of an employee’s 13th salary will depend on how long they have worked for the company. This and their monthly wage earned as a result of the services provided.

Employers will tally up the total salary paid to an employee over the previous twelve months, and divide that by 12. This amount will then be their thirteenth salary. Just as the name suggests.

That means that employees who have worked in full all twelve months of the year are entitled to receive a whole month’s wages as their thirteenth salary. Employees who have worked less than 12 months are still entitled to receive payment. In those cases, the total salary is again divided by twelve. However, the amount is then multiplied by the number of months the employee has worked for the company.

Everyone, regardless of position, will receive this extra stipend from their employees.

When Is Brazil’s Thirteenth Salary Paid Out?

According to the law, companies have to divide the thirteenth salary payout into two different payments. The first payment must be paid between the months of February and November. The second payment is then paid out before December 20th. Just in time for the Christmas Holidays.

Each of the payments must amount to half of the total salary to be received by the employee. Under penalty of law, it is illegal to pay the thirteenth salary using a different schedule than the one stated above.

As a result, the vast majority of employers make their payments in November and December. This is to give their employees maximum purchasing power for the holiday season shopping.

The Countdown to Brazil’s Thirteenth Salary has Started!

Approaching this near to the Christmas Holidays Brazilians are very likely just receiving their thirteenth salary payments. As a result, local retailers and manufacturers are setting up a ton of special offers. These are significant discounts, and no-interest payment plans and they do this to entice shoppers into spending their extra cash.

The good news is that most of them will!

Every year, in a matter of weeks, Brazil’s economy experiences a significant boost. This is due to the extra spending of hundreds of millions of people.

Moreover, every year, the number of people who chose to skip long lines and pushy shoppers to do their Christmas Holiday shopping exclusively online is more extensive and more significant.

A substantial portion of the population will turn to their computers, smartphones, and tablets. They do this to access hundreds of thousands of online stores and access available catalogues. They also do this to compare prices with other virtual storefronts, select their desired product, choose the promotion that suits them best, pick their preferred payment method, and click on the BUY button.

EPAG Can Help You Tap Into Brazil’s Surplus Holiday Spending

Brazil is the largest e-commerce market in the entire Latin American region. Over three-quarters of all Latin American online shopping is done in Brazil. There are more than 210 million people in Brazil. Most of them are chomping at the bit to spend their thirteenth salaries online.

That said, if you do not have a local presence in Brazil, it is quite difficult to tap into the booming market. Most foreign companies have a tough time cracking the Brazilian e-commerce landscape due to a variety of obstacles. These are usually the language, the culture, and, most notably, the particularities of Brazilian payment methods.

Even though Brazil’s economy has been enthusiastically bouncing back from a severe financial downturn. A large portion of the population still lacks access to international payment options. Less than 10% of the population has a foreign credit card. This means that more than 90% of the Brazilian people have difficulty paying for products.

However, this does not have to prevent you from tapping into the Brazilian market.

Epag is the most effective and efficient means of accessing Brazil’s millions of online shoppers.

What Is Epag?

Epag is a seamless cross-border payment platform. It effortlessly maximizes your market coverage, minimizes annoying local processes, and significantly reduces your organizational complexity when accepting payments made in Brazil.

How Does Epag Work?

Epag is a complete one-stop-shop solution with modular server-to-server API. Through a simple, hassle-free integration with the Epag platform, you get immediate access to all local Brazilian payment methods. This includes full support for international remittances and state-of-the-art security.

If you want to tap into Brazil’s Thirteenth Salary spending spree and increase your profit by the millions, get in touch with Epag today.