80% of Brazilians use local Brazilian payment methods. allpago is the payment gateway for your local company to maximize conversion rates.
When it comes to purchases made online, 80% of Brazilians use national payment methods. Therefore, if you have no way of accepting these types of payments, your business is going to struggle to generate revenues.
What many merchants do not fully appreciate, is that most credit cards issued in Brazil are limited to home currency transactions.
It is also essential that a merchant has to have the facility to take instalment payments via a credit card. Without this, it is virtually impossible to trade in Brazil as an ecommerce business.
Another essential payment method in Brazil is the Boleto Bancario. This is a leading payment method for both businesses and consumers.
Brazilian Credit Cards
There are two types of Brazilian credit cards: national (which accounts for around 70% of cards issued) and international (30%).
In terms of their market penetration, they account for around 69% of all transactions made in Brazil; with Boleto Bancario accounting for 24%; online debit at 4%; and, COD, 3%.
Those cards issued for international transactions can process any currency. Each transaction is firstly converted to US Dollars (USD) and then converted again to Brazilian Reais (BRL).
To pay in a currency other than Brazilian Reais (such as USD, or Euros), the international cardholder in Brazil has to pay a ca. 5% exchange rate (effectively the difference between business and tourist exchange rates) and 6,38% IOF (Financial Transaction Tax).
With national credit cards, there are two types to consider: those operating within Global Schemes and those within Local Schemes. Global Scheme operators include such providers as Visa, MasterCard, Amex and Diners. Local Scheme companies include Elo, HiperCard, Aura and Cabel Credito. National credit cards only allow domestic currency transactions.
It is also important to understand that the majority of the payments processed online in Brazil are made with ‘installment credits’. The customer pays through an agreed number of installments which usually number between three and six. The merchant will need to pay around 1.5% more in credit card fees and will need to consider the impact of such a payment method on their cash-flow.
Other Payment Methods
There are also new payment methods, including the increasing use of PayPal.
allpago has an exclusive partnership with PayPal, which enables merchants to process local credit cards with excellent instalment rates. Most recently, PayPal has also added online debit to its product portfolio from which allpago customers can benefit.
The Boleto Bancário method is fundamentally important, as effectively it is used for 100% of B2B payments. One of the main advantages with the Boleto Bancário payment method is that it makes fraud virtually impossible.
It is a payment method driven by the consumer, as it relies on the consumer to initialise the payment action. Brazilian consumers use Boletos Bancários to complete online purchases via their online banking system, an ATM, or they can pay it directly at the counter of any given bank. Once a Boleto is paid by the consumer, a clearing confirmation is given on the next day by the bank.
One of the main advantages of the Boleto is that customers near the limit of their cards (these are normally very low in Brazil), or those that do not possess a credit card, or bank account, can pay through the Boleto Bancario payment method.
Another advantage is that Boleto payments are not subject to charge-backs. Once the payment has been made it is final and may only be reverted by bank transfer.
The main disadvantage with this payment method is that it interrupts the consumers impulse – the figures reveal that only around 50% of issued Boletos are paid. It is not necessary to cancel a Boleto. There are no negative consequences for the consumer if payment is not affected.
Boletos have due dates, up to which payment is possible. In e-commerce terms, due dates of two, to three days are common (especially for retailers, as the uncertainty of payment compromises stock control).
allpago clients who use recurring-payment based models can make up to 20% to 40% more revenue without cannibalizing their credit card payment option.