Brazil, as an ecommerce market, recently gained a lot of awareness fueled by mega events such as the World Cup and the 2016 Olympic Games. While the country is the seventh largest world economy, with a population of 203 million and 120 million internet users, many multinational ecommerce businesses are only scratching the surface of the opportunity the country offers.
The best approach for success in Brazil, which concentrates more than 50% of Latin America’s ecommerce, is to play a local game in some key areas. Although the online market access seems to be boundless, local particularities limit international companies when it comes to taxation, legal formalities, access to local payment methods and international money transfer.
Ralf Germer, the CEO of the payment service provider PagBrasil confirms: “Many extremely successful online businesses approach us with their dilemma: Brazil is one of the countries they get most traffic from, but conversion rates are really poor.”
International ecommerce businesses often try to monetize their traffic from Brazil by processing credit card payments from abroad. What they typically get are unbearable decline rates of around 75%. The main reason for that is the fact that about 70% of all credit cards issued in Brazil, even Visa, MasterCard or Amex labeled, are limited to domestic purchases in BRL only. Due to currency restrictions imposed by the Brazilian legislation, international card acquirers cannot process these. Apart from that, other local payment methods, such as boleto bancário, domestic debit cards and online banking transfer, account for close to half of all online transactions.
Debit cards, only recently made available for online purchases, are still a novelty in Brazil. Its market share, and therefore the share of domestic payment methods, will grow significantly over the coming years.
Teaming up with a local service provider, such as PagBrasil, can help merchants overcome these hurdles. Ralf Germer gives an example: “When Samsung switched their mobile payments for apps and games to PagBrasil, the decline rate for credit cards went down from previously 73% to only 15% within just 30 days.” Samsung processes domestic credit cards via PagBrasil using its pre-authorization and capture features. Taking into account all preauthorized cards, the rate of successful payment conversions is currently 91%.
Converting a 75% decline rate into a 91% success rate automatically results in a boost of sales, but that is not all. Payments with installments, ‘parcelado’ in Brazilian Portuguese, play a key role in Brazilian commerce. Brazilians started financing their private consumption through installments well before credit cards and ecommerce became common.
For instance, when a buyer decides to buy a pair of shoes in 6 installments of BRL 100.00 each, his card gets charged with BRL 100 during the following six months until the total price of BRL 600.00 is paid. It is not the credit card issuing bank who finances the installments, but the merchant, who receives the money equally in six monthly proportions. Merchants might consider that they cannot wait more than 6 months to get their money, but if they knew that just offering installments could boost sales by 50%, they might change their mind. In addition, PagBrasil can finance and advance the payout to its merchants.
Furthermore, PagBrasil’s Boleto Express, debit cards and online banking transfer add further conversions. When switching to local payment processing, the doors to the opportunities of the Brazilian market open widely and merchants typically experience a rapid growth in sales. The integration of PagBrasil’s local payment methods often takes less than 30 days and merchants immediately see their business multiplying in Brazil.
About the author
Ralf Germer is the co-founder of PagBrasil. He has 20 years of international experience in marketing and a proven track record in online sales and payment processing. He was Vice President of Product Marketing Europe at Actebis and later founded 4M Iberoamérica and Advance Digital PR. He holds a business administration and engineering degree and has lived in Brazil, Portugal, Spain and Germany. In addition to German which is his native language, he is also fluent in English, Spanish and Portuguese.
About the company
PagBrasil is the premier online payment processing service in Brazil designed for Brazilian and international ecommerce platforms. Merchants gain access to the broadest set of local payment methods, which may immediately multiply your sales within Brazil. The company is an expert in the entire sales and buying process with more than 15 years of online payment processing experience in Brazil.
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