The Latin American Payments Blog

The Brazilian E-commerce Market And The Hassle Of International Payments

We are now in the third decade of the 21st century. E-commerce continues its inexorable advance towards total commercial dominion. Worldwide, e-Commerce will have sales in excess of 3.9 trillion dollars in 2020 and more than 6 trillion by 2022.

Given the sheer size of the global e-commerce trade, and that virtually every market in every country is growing rapidly. Cross-border e-sales is the way of the future. Especially for companies looking to expand their operations and increase revenue.

However, penetrating international markets can be a daunting task for merchants. Factors such as language, culture, politics, and economic aspects, may hinder a company’s ability to reach customers overseas.

Thanks to increasing access to the internet, it is no longer necessary to establish a local presence to access global markets. Consumers are now primarily looking overseas for their electronic purchases. Some countries in Asia and Latin America showing the highest forecasted growth.

Among these countries with a promising e-commerce potential, we find Brazil.

Brazil, a country of more than 210 million people, possesses the ninth-largest economy in the world. It is also the 8th largest if we look at purchasing power parity. As a result, the Brazilian e-commerce landscape already boasts hundreds of millions of potential customers.

Brazil’s Digital Economy Grows In Potential

The sheer volume of electronic commerce purchases that occur in Brazil every day place it in 10th place among digital markets worldwide. This is just below Russia, but in first place among its Latin American neighbors.

Retail is the main category for digital commerce. This is due in large part to the popularity and ease of access to the internet in the country. 151 million people (over two-thirds of the total population of Brazil,) enjoy internet connectivity and make internet purchases regularly.

It is this substantial number of internet users that drives the booming digital economy of Brazil. Companies spend considerable energy and countless hours trying to capture this vast audience. They do this through targeted advertising driving them to their online stores.

Brazil’s internet audience is composed primarily of urban households with higher-than-average incomes. Moreover, the last few years have seen a distinct upward trend in the economy. This has manifested in increased spending and even more widespread internet use. Data published by the German online statistics portal Statista, suggests that internet access will surpass 70% this year (2020). Hovering around 80% by the year 2023.

As a result, the digital economy of Brazil will only get bigger and bigger as the years pass.

More Money, More Problems

Here are a few data points to give a better perspective to the Brazilian digital landscape:

The Brazilian e-commerce market represents over $23 billion. And is expected to reach an impressive $28 billion by the year 2023.

Brazil has a balanced market share of products purchased over the internet. The four largest categories are Consumer Electronics, Travel, Household Appliances, Clothes, and Apparel.

Brazil has five holidays where retail sales skyrocket: Christmas, Easter, Mother’s Day, Father’s Day, and Valentine’s Day. Other retail events that represent a significant uptick in Brazilians’ online spending are: Carnival, Children’s Day, Consumer’s Day, Black Friday, and Cyber Monday. Which line up with their U.S. counterparts.

There are only around 500,000 online retailers in the country. However, Brazilians hold the 10th position in the global ranking of digital purchases made.

Cybercrime

Unfortunately, there are still more than a few complications regarding e-commerce activity in Brazil. The most critical issue being cybercrime.

With hundreds of millions of people conducting business online, cybercriminals have a significantly easier time targeting unsuspecting folk. This is a problem of which the pertinent Brazilian authorities are aware. Every year new measures are taken to reduce the risks associated with online purchasing.

With this extensive use of online shopping, comes cybercrime. Like in every country in the world, Brazil is no exception. Online fraudsters exist and people are conscious about how they use online shopping checkouts as a result. 6 out of 10 Brazilians wish to opt for alternative payment methods, such as Boleto Bancário. A local cash slip payment method, to minimize their risk of falling victim to cybercriminals. Credit cards are usually only preferred for their speed of purchase (instant vs batched for Boleto). Or for the ability to make payment in installments. 

This preference creates a new wrinkle for international e-commerce shops looking to do business in Brazil. This is because only local companies, or companies that use a cross-border PSP like epag, can offer local payments. This is a big draw for customers. Without these options, your revenues will pale in comparison to their potential when offering Boleto & local credit cards.

epag Provides E-Commerce Operators With A Worthwhile Alternative

Brazil is the largest and most desirable digital market in Latin America. According to a Big Data Corp survey, 75% of e-commerce traffic in the region is Brazilian. The Brazilian e-commerce market is almost ten times that of Mexico. The second-largest market in Latin America.

However, there is a shortage of useful tools to help those companies who are looking to conquer the Brazilian e-commerce market. Especially when we consider the fact that there are some substantial obstacles to maneuver. Such as the language, the culture, and most importantly, the available cross-border payment methods.

A large portion of the Brazilian population does not have the means to enact an international payment. Decline rates for international cards are more than 98%.

This situation is then compounded by the fact that international companies have to pay exorbitant processing fees. And having to deal with the world’s second-most complex tax system.

How epag Can Help You

epag can provide your company with the means of countering that harsh climate. We do this by providing a seamless cross-border operation. It maximizes market coverage, minimizes local processes, and significantly reduces your organizational complexity.

Through a simple integration with the epag platform, you get local payment processing, international remittances, a secure platform, and the most uncomplicated market entry possible.

epag is a tailor-made, low-cost solution with a one-stop-shop and modular server-to-server API. If your company needs ways to access hundreds of millions of potential customers while reducing risk, costs, and complexity. Then epag has something to offer you.

Don’t let the complexity of entering an international market blind you. Brazil will remain the largest e-commerce market of the Latin American region for the foreseeable future. Contact us here to discuss further!