- Business Case -

Understanding Online Payments in Brazil


One of the top 10 biggest economies in the world,
Brazil is the most relevant and mature e-com-
merce market in Latin America with over 40% of
the regions online market. Service providers who
Brazil rules e-Commerce market in Latin America
Brazil continues to be the major e-commerce mar-
ket in Latin American. Currently, 45% of the regions
e-commerce sales originates in Brazil. The country is
expected to generate $45 billion US out the regions
$117 billion US business-to-consumer (B2C) e-com-
cards. National cards account for more than 90% of
the financial volume of credit cards, and can only be
processed in Brazilian Real (BRL). International credit
cards can process in both foreign and local currency,
but only 20% of Brazilian buyers have access to them.
Authorization rates on e-Commerce transactions in
foreign currencies are usually less than 10%, com-

tailor business solutions for complex local markets merce sales by the end of 2018. pared to over 80% for local transactions.

are key partners for international digital buyers

Brazil accounts for around 40% of the 348 million in-
wishing to do business in the region. ternet users in Latin America and is the fifth largest
digital market in the world. Internet users in Brazil
spent 38% more time online than in the rest of Latin
America.
76% of Brazilian adults possess a payment card and,
1. e-Commerce Sales in Brazil, 2014 - 2018 according to Abecs (Brazilian Association of Credit
(billion USD) Cards and Service Companies), remote purchases
with credit cards grow twice as fast as the cards sec-
tor, accounting for more than 20% of the total credit
card expenditure. This creates an ideal opportunity
for international companies to enter this market.
45
41
37 Online success requires local payment options
33
28 Cards and Boleto Bancrio dominate online pay-
ments in Brazil, which together account for more
than 85% of all online purchases in Brazil.
Credit cards are the primary payment method for
2014 2015 2016 2017 2018
69% of Brazilians. However, it is important to differ-
source: eMarketer entiate between national and international credit
Cielo (previously VisaNet) and Rede (previously Rede-
card), which used to process transactions exclusively
on behalf of Visa and MasterCard respectively, dom-
inate the Brazilian merchant acquiring market with
51% and 38% of the credit card payments billed vol-
umes respectively.
New acquirers, such as GetNet (owned by Bank
Santander), Stone (who acquired Elavon in 2016),
First Data, and Global Payments are now entering
the market and forcing improvements in processing
charges and technology.
Although credit cards are still the preferred payment
method, Boleto Bancrio, a payment slip issued
through the banks, is the main alternative payment
method for customers who buy online. Boleto works
like a cash payment, allowing customers without
credit cards or who are unable to use a credit card
to buy online. Four out of 10 customers that are un-
banked have completed online purchases using this
payment method.

Understanding Online Payments in Brazil: A Business Case by allpago

 This payment method accounts, for around 24% of
the total e-commerce market and up to 37% of all Recommendations
2. Online Payment Methods Share in Brazil, 2016
online purchases and in industries with higher tick- for operating locally in Brazil
et sizes. As Boleto targets an entirely new portion of
7%
the market, this payment method doesnt cannibal- Brazil is a complex business environment with many
other
ize credit card payments. Almost all B2B payments in risks and challenges. For the ease of doing business
24% Brazil are made this way because it allows companies and managing tax obligations, it is ranked 116th and
Boleto
48% to avoid costly wire transfer fees. 178th (out of 189 countries) by the World Bank. It
Bancrio
National
also presents a great opportunity to businesses will-
Credit Cards
As Boleto and national credit cards can only be pro- ing to accept the challenge.
21% cessed in BRL, it is crucial that international mer-
International chants offer their products and services in the local
The challenges of operating outside of the country
Credit Cards currency.
include the high administrative costs due to the lo-
cal legal requirements and the onerous tax system.
source: allpago Research More than any other market in Latin America, inter-
Tighter regulation promotes
excellence in Brazilian payment industry national merchants working in Brazil need a reliable
partner with local knowledge to avoid costly legal or

3. Market Share per Acquiring Bank in Brazil, 2014 The Brazilian government started to define a legal
and regulatory payment framework several years
ago. The implementation of MP 615/13 and Law
12.865/13 have defined how the Central Bank of Bra-
Cielo 51%
zil handles transaction authorization, operation, gov-
ernance and payment service provision for all of the
payment institutions in the country. Decisions taken
Rede 38% by the Central Bank are opening the market to new
players and leading to increased competition.
financial issues.
Brazil has a unique payment profile, and an under-
standing of local and non-cash payment methods is
crucial for successful e-commerce. Merchants need
to understand the unique buying behaviour of Bra-
zilians and adapt their payments options and ap-
proach to the market accordingly.

As payment methods evolve and the Brazilian con-

Getnet 7% sumer takes advantage of new technologies, expect
the regulators to continue to implement new laws
and tighter regulations.
0% 10% 20% 30% 40% 50% 60%
source: Lafferty

Understanding Online Payments in Brazil: A Business Case by allpago

 Gabriel Barros
Country Manager Brazil If you want to improve your payments in LATAM
Gabriel Barros is Country Manager Brazil of allpago, the new
way of accepting payments in Latin America. Before joining
CONTACT US
allpago, he worked as CFO and Strategic Planning and Busi-
ness Development Manager for Freeddom, and managed
the merchandising budget for service providing companies
throughout Brazil for Procter & Gamble

Gabriel studied at Fundacao Getulio Vargas, in Brazil, and is

fluent in Portuguese, Spanish and English.

Understanding Online Payments in Brazil: A Business Case by allpago

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