Brazil’s Online Payment Market is Booming

The Brazilian e-commerce market is booming. Representing the world’s ninth-largest e-commerce market and the largest in Latin America, Brazil is one of the hottest global growth spots for online B2B companies and payment providers.

With the 2016 Rio Olympics set to bring record numbers of tourists to the country, online retailers are anticipating a sharp rise in online payment volumes, in tandem with Brazilian companies turning to e-commerce thanks to the wide array of payment methods available.

As one of the strongest emerging market economies, Brazilian consumers and businesses are turning to online payments in ever greater numbers – according to eMarketer, in 2015 Brazilian e-commerce generated USD 26 billion in revenue, compared to USD 14 billion in 2011. Digital goods are forming an increasing proportion of online purchases, with software, online gaming, apps and digital media downloads dominating purchases categories. Brazil is also a fertile ground for B2B e-commerce, given that around 11 billion e-invoices are processed annually.

Brazilian payment method usage

Online payments in Brazil are dominated by credit cards and the domestic payment slip scheme Boleto Bancário – together these methods account for more than 93% of all online purchases in Brazil.

Credit cards are the main payment method for 69% of Brazilians, although there is an important distinction between domestic and international credit cards. While domestic cards account for almost half of online purchases, they can only be processed in Brazilian currency (BRL), whereas internationally accepted credit cards can enable purchases in both domestic and foreign currencies. But as international credit cards are used by just 20% of Brazilians, this payment method has a limited reach, leaving the way open for alternative online payment methods.

Mobile payments have yet to reach critical mass, but transaction numbers are growing at around 10% each year and are expected to rise significantly in the years to come thanks to the increasing availability of smart phones and devices in the Latin American region.

Boleto Bancário, a payment slip being output through the banks, is the major alternative payment instrument for online transactions, and is used for virtually all B2B transactions in Brazil due to its lack of expensive transfer fees. Boleto works like a cash payment, enabling buyers without access to payment cards to make purchases online. According to payment provider PagBrasil, 4 out of 10 customers that are unbanked have made online purchases thanks to this payment method.

Brazilian companies in the online B2B space are increasingly turning to online procurement portals to facilitate B2B transactions. One example is Mercado Electronico, which in 2014 launched a portal aimed at 1 million registered B2B companies. Payment methods such as these are helping to propel Brazilian B2B e-commerce volumes. It is estimated that B2B e-commerce value could reach BRL238 billion over the next few years.

Opportunities for international providers

The importance of international sites that offer services and products for the Brazilian market is also a major factor in Brazil’s e-commerce growth. The main motivations for cross-border purchases are lower prices, lack of availability on national websites or the product not yet available in the Brazilian market. Total cross-border purchase volume was USD2.4billion in 2014.

Credit cards account for around 60% of payments on international websites, followed by Boleto Bancário, online banking transfers and debit cards. During 2014, 34.8 million orders were placed on international websites and the average ticket was USD70.

Conclusion

Brazil presents fantastic opportunities for alternative payment providers and international B2B merchants, however, an understanding of the local and non-cash payment methods in e-commerce along with the regulations governing the Brazilian payment market will be a defining factor in success.

Fortunately, Payzoff has an extensive experience of assisting merchants in penetrating the Brazilian market by offering all payment methods required for a successful business. Taking advantage of an opportunity to expand your business in emerging markets may be one of the most important strategic decisions for your company.

References: eMarketer.com, thepaypers.com