Brazil payments guide

A guide to payments in LATAM’s biggest ecommerce market.

Illustration of bird and plants

Welcome to Brazil

Before rushing to translate your website into Portuguese, or scouting for office space in São Paulo, it is worth taking the time to consider how your potential Brazilian customers might like to pay for your goods or services.

Card use in Brazil is relatively high and Brazilians rarely pay for anything outright. Most online transactions are paid in installments. Cash-based methods such as Boleto Bancário are popular too, and will give businesses access to Brazilians without credit cards.

Restrictions on banks and currency controls mean that, from an outside perspective, entry into Brazil is not always straightforward. This document will walk you through some of the key issues international merchants should consider prior to market entry, including local payment legislation and payment methods, based on extensive on-the-ground experience.

Landscape picture of Brazil

The opportunity

Despite recent upheaval, Brazil remains a key market for businesses eyeing Latin America as a region for expansion. It's the largest online market in Latin America, representing over 40% of the region’s ecommerce sales. In 2015 online retail sales reached $19 billion and Bain and Company expects the Brazilian ecommerce market to maintain a healthy annual growth of 11% right up until 2019. As an illustration that the market is alive and well, Brazilian ecommerce giant Magazine Luiza has seen its revenue triple in Q2 of 2016.

As of January 2015, its middle class accounted for as much as 70% of the population, outnumbering the combined populations of France and England. Tough-times aside, that represents a considerable potential customer base, and enticing opportunity for expansion.


Shopper snapshot

Internet penetration has been growing steadily in recent years. 66% of the population is now online, up 5% from 2015 . This means a whopping 127.6 million Brazilians were online in 2016, a figure projected to grow to 148.3 million by 2021, which ranks it seventh in the world in terms of internet usage.

This charge is being lead by the young city-dwellers. According to comScore Media Matrix, almost half of online shoppers are aged between 18-34, and are overwhelmingly located in urban zones in the southeast (including São Paulo, Rio de Janeiro and Belo Horizonte), the northeast (Salvador and Recife) and south (Porto Alegre, Curitiba, Florianópolis).

But while connectivity is on the rise, the inevitable belt-tightening resulting from the economic crisis has made the Brazilian shopper a cautious spender. A Mckinsey survey revealed that more than half respondents are actively looking for the best deals, and a study by SPC Brazil found that 60% are more likely to buy a product online if there is a promotion or loyalty program attached to the purchase.

Another crucial driver of online sales in Brazil is free shipping. A study conducted by SPC Brazil reported that 39% of respondents cited this as a top-influencing factor when deliberating over a purchase. More affluent shoppers have the luxury to be socially conscious, and factors such as a brand’s social commitment to the protection of the environment or sanitary standards are important. International brands are seen as a sign of wealth, and international technology brands and sports retailers can expect to do well within this segment.

Online fraud is a big concern in Brazil, with 78% of respondents of an eMarketer survey saying they were worried about identify theft. So businesses must take care to put shoppers at ease by limiting redirects to unknown sites and clearly displaying security certification. Further, smart risk management systems reduce friction for shoppers by using data to identify and block fraud while letting legitimate customers pay unhindered.

Seriously social

Brazil is famously a hyper-social country, and this trend is just as prevalent online, with The Wall Street Journal crowning it the ‘social media capital of the universe’. Messaging apps are particularly popular and nearly 100% of Brazil’s online population use WhatsApp.

Ecommerce sites in Brazil are catching onto this trend, with about 60% of companies using social media to drive brand engagement. Therefore, as the lines between ecommerce and social media blur, businesses would do well to keep the Brazilian enthusiasm for social networking in mind.

Mobile shopping

A late bloomer in terms of smartphone adoption, Brazil is now catching up at an incredible pace, with an average of almost two devices per person (around 400 million cell phones in total). Consequently mcommerce is very much on the rise, climbing from 10 to 18.6% in 2015 , and expected to reach almost all internet users (close to 60% of the country’s population, or over 100 million people) by 2017. In-app payments are also popular; a study conducted by OpinionBox in 2015 found that 39.5% of Brazilian smartphone owners purchased in-app content.

It is important for businesses to keep mobile payments in mind to fully capitalize on the potential in the market, as Netshoes CFO Leonardo Dib explains: “Having a mobile strategy has become crucial for retail companies. For Netshoes it is a clear focus. Mobile represents more than 50% of the traffic to our website and 30% of conversion. This is why investing in innovation in payment technology is is fundamental.”

Cross-border or local

Back in 2013, in a move to keep ecommerce local and discourage international purchases, the Brazilian government added a 6.38% tax to all cross-border transactions. Additionally, Brazilian acquirers began to refuse cross-border transactions processed in BRL.

Consequently Adyen recommends investing in a local entity and processing via a local acquiring network. In this way you can keep your prices low and your authorization rates high. Other benefits:

  • Higher authorization rates (by up to 30-40%).
  • Shoppers spared the 6.38% tax.
  • No exchange rate variations on credit card bills.
  •  Access to more shoppers.
  • Access to domestic acquirers and payment methods.
  • Ability to support paying in installments.
Aeromexico logo

BlaBlaCar logo

“Com a Adyen, a BlaBlaCar consegue oferecer uma experiência consistente em qualquer dispositivo. Quer o usuário esteja pagando pelo aplicativo nativo, ou pelo navegador de um dispositivo móvel, o checkout foi planejado para encantar o usuário e impulsionar as conversões em qualquer tamanho de tela. E, como todos os pagamentos são direcionados ao mesmo sistema, a BlaBlaCar pode ver todas as transações realizadas através de qualquer dispositivo em uma única exibição" - Amelie Seguret, BlaBlaCar

Woman in street

Payment methods in Brazil

  • Visa
  • Mastercard
  • Boleto Bancário
  • American Express
  • ELO
  • Other

Brazilian consumers are avid users of credit cards, with the overwhelming majority preferring credit cards for their online purchases. Alongside Visa and Mastercard, local card scheme ELO is growing in popularity. 15% prefer cash-based methods such as Boleto Bancário.

Credit card icon

Credit cards

In the joint lead for online purchases are Visa and Mastercard. AMEX serves a small segment of high earners while ELO is typically targeted at lower income earners. Around 70% of consumers have cards that are not enabled for cross-border payments. There are four key acquirers in Brazil capable of processing ecommerce transactions: Cielo, Rede, Santander and Adyen’s own local acquiring network.

Adyen tip

Adyen has its own acquiring network in Brazil (Adyen Acquiring) for Visa and Mastercard, delivering a robust and reliable connection underpinned by advanced data-driven technology. Additionally Adyen is connected to all major Brazilian acquirers (Cielo, Rede and Santander/GetNet).

Adyen helps merchants to maintain processing stability and optimize approval rates by dynamically routing transactions to ensure the best results for each bank.

Installments

Payments in installments are very common in Brazil, accounting for 80% of ecommerce payments for businesses with a typically high average transaction value. These are interest-free for the buyer and are collected month-by-month by the merchant (ranging from two to 12 months).

Businesses have the possibility to anticipate the payment of the full amount but this generates a so-called anticipation fee which is charged by the acquirer.

Anticipation fees may vary depending on the amount of installments to be paid upfront and the volume anticipated.

Global ticketing merchants Eventbrite and ViaGoGo have recognized the importance of accepting payments via installments, and now allow Brazilian customers to stagger their ticket purchases over a few months.

Adyen tip

Adyen offers payments in installments to its merchants operating in Brazil, and reconciliation facilities for payments executed via installments.

Boleto logo

Boleto Bancário

Boleto Bancário, simply referred to as Boleto (literally meaning ‘ticket’), is a payment method regulated by the Brazilian Federation of Banks. A Boleto can be paid at:

  • ATMs
  • Any bank (including online banks) or post office
  • One of the more than 250k Lottery Agent stores
  • Supermarkets
  • Via a mobile app

(Once it has expired it can only be paid at the issuer bank facilities.)

Because Boleto payments cannot be disputed or reversed by the consumer, it is a low-risk payment option.

Boleto Bancário represents about 15% of all payments in Brazil and is a must-have option for businesses operating in the market. Solutions like Boleto are very common across LATAM, but the Brazilian Boleto has the advantage that it can be paid at any bank, not just the issuer bank.

Adyen tip

Adyen enables the storage of shoppers’ Boleto Bancário payment information using secured tokenization of the data. This is an advantage because it means that, although Boleto Bancário is not automated, Adyen can help merchants speed up the process by pre-filling certain information for repeat customers.

Wallet logo

Digital wallets

In addition to the key payment methods, Adyen supports multiple local wallets. These wallets have limited reach, meaning they are optional, rather than must-haves.


Grow in Brazil with Adyen

Adyen has a dedicated local team of highly qualified payments experts in Brazil. This team, which includes business knowledge, technical support, and local developers is ideally suited to assisting the growth of large ecommerce businesses in Brazil.

In addition to offering the most stable payments platform in the Brazilian market, Adyen comes with a suite of built-in features unrivaled in any single platform solution.

Dynamic card validation
Dynamically formats card validations as $0 or $1, depending on bank compatibility, dramatically reducing churn.

AVS: Address Verification System
Verifies the shopper by crosschecking the billing address provided by the user with the address held by the card issuer.

Automated chargeback management
Adyen can defend up to 25% of chargebacks automatically, freeing up valuable resources by not dealing with lengthy disputes.

24/7 live reporting
Merchants have the ability to review transactions in real-time from Adyen’s Customer Area.

One-click payments
Merchants can deliver easy payments for returning customers without the burden of PCI. This can be done in combination with installments.

Fully automated refunds
Automating both partial and full refunds from Adyen’s processing platform.


Roundup

For international merchants looking to gain a foothold in the Brazilian market, it is advised to keep the following key points in mind:

An overwhelming majority of Brazilian consumers use credit cards, but due to currency controls and bank restrictions, the bulk of these can only be used in the local currency. Therefore, international merchants are advised to process payments locally.

Boleto Bancário is a local payments method that accounts for around 15% of online transactions, making it a must-have payment option for international merchants serious about reaching a mass audience in the market.

Due in part to local payment preferences such as paying by installments and using local methods such as Boleto, mcommerce has been slow on the uptake, compared to other emerging markets. However this is changing, and mobile is rapidly becoming a key sales channel in Brazil.

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