The Latin American Payments Blog

The Brazilian Payments Landscape: General Overview

Brazil remains a favorite destination for companies looking into international expansion. Although small in comparison to other markets, Brazil is the 10th largest e-commerce market in the world, reaching USD 13 billion in revenues in 2018. This makes it the largest online market in Latin America, representing over 40% of the region’s e-commerce sales – more than the combined sales of Mexico and Argentina, the second and third largest markets in the region.

Brazil remains a favorite destination for companies looking into international expansion. Although small in comparison to other markets, Brazil is the 10th largest e-commerce market in the world, reaching USD 13 billion in revenues in 2018. This makes it the largest online market in Latin America, representing over 40% of the region’s e-commerce sales – more than the combined sales of Mexico and Argentina, the second and third largest markets in the region.With a rising middle-class population, comes more access to the internet and online services. Today, 76% of the Brazilian population has access to the internet either via mobile devices or computers. Out of approximately 130 million online users, 58 million are active online shoppers. According to Ebit Webshoppers, the southeast region (which includes São Paulo, and Rio de Janeiro) has the highest concentration of online consumers, accounting for 57% of the total country sales.

mobile payments

In terms of payment methods, Brazilian consumers prefer to pay for their online purchases using locally issued credit cards and when possible, in installments, where consumers can choose to breakdown the total amount into several equal monthly payments. Around 49% of online purchases are made via installments.

In addition, cash-based methods such as Boleto Bancário are highly popular amongst the entire population, not just to those without access to credit cards.

In order to serve the Brazilian market better, merchants can choose to invest in a local entity and process via a local acquiring network. However, this might not be a viable option for some merchants as Brazil may not represent a big market share and investments in creating a local presence can be costly and logistically or legally cumbersome.

Alternatively, merchants that wish to drive more revenue and capture Brazilian market share without investing in a local setup can partner with local Payment Service Providers (PSPs) who are connected to local acquirers and have the ability to offer cross-border online payments to international companies.

Some of the benefits of local acquiring in general are:

Access to more consumers and local payment methods

Only 40% of Brazilians have access to credit cards, and 95% of these credit cards are not enabled for international payments. Offering local payment methods and cash-based alternatives, such as Boleto Bancário (which are easily accessible by the entire population), will give you access to more consumers and thereby also increase your revenues.

Ability To Offer Installments

Many people in Brazil find it extremely convenient and prefer to pay in installments. When your business offers local payment, it includes paying in installments which is an attractive alternative for most consumers. The average income of Brazilians is somewhere around $2700 per month. This includes people that earn less than that as well. With the current global financial situations and inflation in the country, the majority of the citizens in Brazil can only afford to buy products on installments. This has not only helped Brazilian citizens but also the Brazilian government as well.

Higher Authorization Rates

The bank approves of the payment methods that are done locally through credit or debit cards. Local payment methods have high authorization rates because of the fact that they are viewed as relatively less risky as compared to foreign transactions.

Lower Taxes And Fees

Alternative payment methods may charge a lot of taxes and service fees which is not the case for local payment methods. This is due to the fact that foreign transactions take into account the tax policy, exchange rate and financial situation in the base country. The platforms that support and carry out the financial transactions tend to charge a hefty foreign transaction fee as well. This is why local payment methods have lower fees and lower taxes.

Some of the benefits of local acquiring via a cross-border PSP are:

No Need For A Local Setup 

If businesses want to enable local Brazilian payment methods, they need to invest time and resources in creating a local setup which is ultimately an extremely time consuming and complex process. However, when businesses partner up with PSPs, they do not need to worry about creating a local setup in order to accept local payment methods.

It’s Extremely Convenient 

Setting up a local entity takes several years but through a PSP, everything is extremely convenient and much less complex. All you have to do is integrate your API with the platform, and let your local payment provider do the rest of the job. Some PSPs charge a fee just to have the agreement in place, whereas others (like epag) only charge for “pay for what you use” strategies in place.

Increase revenue through the best-fit payment methods

The payments landscape has changed quite a lot over the years as businesses keep emerging and entering the market. This expansion has resulted in new Brazilian payment methods being introduced that are far more convenient. The advancement in technology is one reason that businesses have been able to offer a wide range of payment methods to their clients. Technology has actually revolutionized the way people pay for goods and services. Brazil is a very populous country and a higher population translates to higher customers. So it was only a matter of time that new and improved payment methods supported by technology were introduced in the market.

Businesses who want to maximize their revenue should be aware of the fact that they won’t be successful in this initiative without accepting technologically advanced local payment methods because they are preferred more by consumers. 

They can easily enable and allow their customers to pay through these methods when they partner up with PSPs without the need of going through the hassles of creating a local entity. 

Foreign companies can also take advantage of the fact that these payment methods are accessible to most of the population of Brazil. They can easily partner up with PSPs and establish a flourishing business within the region of Brazil. 

The bottom line is: you cannot fully take advantage of the market when you restrict your customers to a few payment methods that are accessible to only a handful of the public. 

Menu