Online Debit Payment for E-commerce in Brazil

Over the coming years, online debit is likely to become one of the most popular options for e-commerce payments in Brazil. In this article we will provide an overview of the main characteristics and integration of online debit payments.

Summary of Online Debit Payments

Out of the main online payment options currently available in Brazil, little attention is directed to the method of online debit payments, which is also known as wire transfers or net banking payments. Online debit transactions can be summarised as a transfer of funds between the customers and the merchants bank accounts that, as opposed to other payment methods, takes place from within the bank's proprietary online environment.

Whilst not as popular as other methods such as credit cards and Boletos Bancários, online debit remains one of the major payment options offered by e-commerces of various sizes in Brazil, mainly due to features like its reduced costs to merchants and the security and reliability of online banking systems. Recent surveys from Brazilian payment service providers indicate that online debit payments are chosen by close to 5% of local online customers, and that this option has experienced marginal increase in adoption over the latest years.

Online debit remains one of the main payment options that online stores must keep in mind when operating in Brazil, and some recent changes and trends in the country’s e-commerce landscape might increase its relevance in the close future. The most relevant of which is the decision of the Brazilian Banking Federation to discontinue the emission of unregistered Boletos, a factor that should make Brazilian merchants much more reluctant to offer Boletos Bancários as a discounted payment option, as has been a widely adopted practice until recently.

Due to this decision, it is most likely that merchants will need to look into alternative solutions to cater to customers that have previously been used to paying for purchases using Boletos, audiences who are, in most cases, not interested in opting for payment with mainstream methods such as credit and debit cards.

Online Debit in Comparison to Boleto Bancário

Online debit payment presents significant drawbacks but also a number of advantages as a payment method in comparison to Boletos Bancários. The main challenge faced by online debit is that it requires customers to have a bank account and enable them to fulfil online transactions, a combination of factors that is currently not ubiquitous among Brazilians. Research indicates that close to 40% of the country’s adult population do not hold a bank account, and this was precisely one of the main reasons for the rise in the popularity of payments using Boletos Bancários.

Enabling payment through online debit can be considered a much less streamlined process, as it requires stores to set up bank accounts and contact each bank it is interested in allowing customers to pay through its systems. Contrary to the case of Boletos Bancários, accepting online debit through a single bank will leave a large portion of a store’s customer audience unable to fulfil payments, making it almost a necessity for stores to contact multiple banks and integrate each of their online debit payment interfaces.

Out of the main advantages of online debit payments are that payments receival and purchase approval are carried out instantly, as opposed to the usual delay of 1 to 2 days necessary for the payment using Boletos to be identified. This feature not only presents an advantage to customers who have their purchases approved instantly but also for merchants, that are no longer required to deal with products being pulled out from sales due to the high number of customers who opt to pay using Boletos but do not compensate them afterwards.

Additionally, online debit requires only marginal fixed fees to be paid to banks after each successful transaction, which allows for this option to be significantly less burdening to stores when compared to credit or debit card transactions. For customers not interested in splitting payments across multiple instalments and especially for those interested in being granted discounts when paying in single sums, opting for online debit will likely become the most appealing option following the decrease in adoption of Boletos Bancarios.

Enabling online debit payments can also benefit businesses that adopt subscription based models, as this type of transaction can be automated by banking systems in a way that is not possible when payment is collected through Boletos Bancários.

Integration with National Banks

Online debit transactions require both customers and merchants accounts to belong to the same bank, and consequently it is advisable for stores to contact multiple banks in order to serve the largest amount of customers as possible. The main Brazilian banks currently offering online debit options include Banco Itaú, Santander, Bradesco, Banco do Brasil, HSBC, Caixa Econômica Federal and Banrisul.

Local e-commerce owners state that the complexity of integrating online debit systems depends on each bank, and that in general terms the entire process for enabling this payment method takes close to 60 days. For foreign stores operating in Brazil the integration process may involve additional bureaucracy, as banks require an extensive list of local documents when setting up accounts and it is not possible to do so remotely.

Checkout Information When Paying Through Online Debit

The need to enter online banking environments during checkout can be a cause for drops in conversion rates, and it is recommended for stores to present customers clear and detailed information regarding this payment method during the checkout process. One aspect of online debit that should also be informed to customers are that banks impose daily limits to transfer transactions, and might block purchases in cases when these limits are exceeded.