Why are credit cards driving a rise in Brazilian e-commerce?
According to the Brazilian Association of Credit Card Companies and Services, credit cards are the most used payment option online. We look at the reasons behind this and why e-commerce merchants must embrace local cards to drive sales in Brazil.
The rise of the credit card
As recently at 2009, credit, debit and pre-paid card payments made up only 19.1% of all online sales in Brazil. Like many other LATAM countries, cash made up the majority of payments. However, 2018 data on online payments in Brazil, released by the Brazilian Association of Credit Card Companies and Services (ABECS), tells an entirely different story. Not only do cards now account for 41.5% of online transactions but they are also used more frequently than ever before. Furthermore, credit card payments increased 14.6% in 2018, reaching a total value of 246.1 billion USD (965.5 billion BRL).
This data sits hand in hand with a growing e-commerce market in Brazil itself. Brazil is a country of 209.3 million inhabitants, of which 70.7% have access to the internet. It is the single largest market in LATAM with e-commerce revenue of 28 billion USD in 2018 and has shown consistent year on year growth.
So how big is this e-commerce growth?
Clearly then, Brazil is an ever more attractive prospect for e-commerce merchants. But what more can the ABECS report tell us about the growth in card usage in Brazil? Well, merchants will be glad to read that payments with cards are projected to reach over 459 billion USD (1.8 trillion BRL) by 2019. Better yet, the card industry is projected to grow a further 16% in 2019.
The frequency of card usage is also on the rise. The report states that 95% of e-commerce customers use a card every month, and a further 55% use them weekly. This rise could be attributed to the focus the Brazilian government has had on increasing the penetration of digital points of sale for cards throughout the country. Indeed, Brazil now has more card machines per inhabitant than Canada, Australia or the UK.
Taking advantage of the rise of card payments
However, e-commerce merchants looking to swoop in and take advantage of this growing market should be aware of a few things first. Simply providing international credit card payment options (like Visa or Mastercard) still won't be accessible for a large number of Brazilian customers. Many Brazilians have local cards, issued by Brazilian banks, rather than international card merchants.
According to BoaCompra's estimates, only 22% of credit cards issued in Brazil are enabled for international transactions. Additionally, the majority of local cards only allow the customer to pay in Brazilian Reals.
The second important fact to know about Brazilian card payments, is the popularity of installments. Given the relatively low buying power of many Brazilians, installments represent a popular way of purchasing higher value items and paying off the balance over a longer period of time. For e-commerce merchants they increase the relative value and frequency of sales. In 2017, 50.2% of online card sales were paid off in installments. Choosing to offer installments to your customers will widen the number of customers willing to purchase through your site. However, you may also need to determine your policy on interest in line with your payment aggregator.
Ensure your payment methods suit the market
In light of the localized nature and style of card payments in Brazil, e-commerce merchants must ensure they cater to these unique payment methods to ensure success. Payment aggregators, like BoaCompra, can guide merchants through the process of offering and managing localized payments. In this way, you can ensure your business offers options which suit the wide variety of people and cultures that Brazil represents. Better yet, you can take advantage of the year on year growth in the largest of LATAM e-commerce markets.