For years unregistered boletos have been the easiest way for online businesses in Brazil to collect payments. Thanks to open source libraries and limited bureaucracy you could have an online payment system based on unregistered boletos up and running in minutes.
Unregistered Boletos vs. Registered Boletos
Registered boletos require that the bank actively issue a boleto with information about who can pay the boleto, due date, amount etc.
Unregistered boletos used to give you a lot of flexibility, you could at any point regenerate a new boleto with new information without having to interact with the issuing bank. Online businesses have been using this possibility actively for up-selling to customers or to alter information prior to payment.
With registered boletos you will have to deal with the bank for both issuing and modifying the boleto. The bank charges for the generation, modification and cancellation regardless if the online business receive the payment or not.
Most banks also have very cumbersome integrations to their boleto system which lead to that online business, in practice, being forced to use a “boleto gateway” or “boleto acquirer” in order to issue a registered boleto. Such intermediators also charge transactions fees in addition to the bank fees and increase the additional costs of issuing a registered boleto. From an online merchant point of view there are no advantages with registered boletos.
Timeline for End of Life for Unregistered Boletos
In February 2015 the Brazilian Banking Federation known as Febraban published a timeline for the changes of the boletos platform for all Brazilian banks which effectively will end the possibility to collect payments using unregistered boletos.
The timeline looks as follows:
- June 2015 - End of new Unregistered boleto accounts
- December 2016 - End of life for all Unregistered boleto accounts
There are still critical voices to the end of life decision for unregistered boletos and the timeline might be changed.
Alternatives to Unregistered Boletos
Unregistered boletos give a lot of flexibility but at the end of the day there are three main advantages:
- A widely recognised payment instrument that can be paid anonymously even in non-financial institutions like supermarkets
- A payment instrument with an easily traceable reference that simplifies the reconciliation for the merchant
- A due date where overdue boletos can only be paid in the bank issuing the boleto
Merchants that want to keep the flexibility that unregistered boletos offers can simply generate invoices. The trade of for the merchant is that they can no longer benefit from advantages of the boleto system mentioned above.
From a banking point of view an invoice is treated just like any other wire transfer. If the customer wishes to have the anonymity, an invoice can be paid by cash deposit at any financial institution. The main disadvantage with invoices is the reconciliation on the merchant side, also the lack of traceable references can make it difficult to relate payments to invoices.
How Will This Affect Boletos?
With boletos no longer being an available payment instrument it is possible that the use of registered boletos as a payment instrument will also decline.
Boletos were never intended as an online payment method but gained popularity as an online payment method as it used to be the only alternative to credit cards. For 10 years, merchants have actively incentivised consumers to pay with boletos by giving discounts in the range of 2 - 5% for boleto payments.
As we have covered previously, credit cards are not a very attractive option for the merchants due to slow payout and high transactions costs.
Today’s online debit cards provide the same advantages for a merchant as a registered boleto with low transaction costs, quick payout and no chargeback due to mandatory implementation of 3D secure. The penetration of debit cards is still low but the overlap between e-commerce customers and debit card penetration is high.