Sales from global e-commerces to customers in Brazil have risen substantially over the last few years, to the point that merchants from all around the world are currently able to leverage the potential of this developing South-American market. In this article we will outline the main options for offering cross border payments efficiently to Brazil.
Purchases by Brazilians from Global E-commerces
Several factors have contributed to the recent increase in the number of purchases of products from foreign e-commerces by Brazilians, such as the development of the international shipping and logistics segments. As a whole, these enabled the prices and timing of product shipping to be significantly reduced, to the point that buying from an offshore vendor has become as appealing, if not more, than purchasing from national stores.
Market research indicates that a vast amount of Brazil’s online consumer audience has become interested in cross border purchases. According to e-commerce analyst E-bit, 21.2 million Brazilians purchased from international vendors in 2016, with popular categories including fashion items, household appliances, books and subscriptions, and mobile devices. According to their surveys, the main reason for Brazilians to purchase from foreign retailers are the reduced prices when compared to national stores, a factor that can be linked to the substantial amount of merchants currently offering free shipping to the country.
Offering digitally distributed items to Brazil also presents a substantial opportunity, especially due to the absence of shipping or logistical challenges faced by physical products. Both sectors of digitally distributed software and media content offered through subscriptions have experienced an increase in their revenue from Brazil. For example, major global players like video streaming service Netflix and game distribution platform Steam have recently listed Brazil as one of their fastest growing markets.
One of the most important aspects vendors should look into when offering cross border commerce to Brazil is setting up efficient payment systems in order to facilitate the purchase experience to the country’s customers. There are currently multiple options for enabling payment systems able to process transactions from Brazil, and stores can look into the advantages and downsides of each one in order to choose what best fits their needs.
Payment Through International Credit Cards
The most simple solution for offering cross border payments to Brazil is allowing for purchases to be processed using international credit cards, as this method does not require any additional changes to an already established online payment system that accepts global credit card brands. However there are some drawbacks that should be taken into consideration by merchants who intend to use this option.
The main one of which is that only 26% of the total Brazilian population makes use of credit cards, according to a recent assessment by credit scoring company SPC Brasil. Also a significant amount of this consumer base either make use of national card brands or do not hold credit cards enabled for international transactions, leaving it unable to fulfil purchases at foreign e-commerces.
It is even common for users who make use of international credit cards to have their purchases blocked due to credit card networks erroneously considering these transactions as fraudulent ones. Additionally, Brazilians who make use of credit cards to make international transactions are required to pay a tax on the lump sums known as IOF, which is fixed at 6.38% and can lead to order prices turning into less competitive options when compared to purchasing from local stores.
Payment Solutions Localised to Brazil
There are multiple types of payment systems that can be adopted by global stores in order to provide a better shopping experience to customers in Brazil. Local payment solution providers are able to offer several options of payment solutions localised to the country, all of which are able to capture payment from local credit card brands and other popular national payment methods, such as Boletos Bancarios. Some companies that offer this type of services are Digital River, EBANX, Adyen and Allpago.
Most f these services are handling systems for foreign stores to process payments from Brazilians locally and have the transactions remitted to its country of origin. This option enables, among other benefits, a much higher authorisation rate by credit card networks.