Despite political turmoil and a recession, e-commerce in Brazil still seems to be booming:
- E-commerce in Brazil grew by 5.2% in the first 6 months of 2016 compared to the first 6 months of 2015
- Overall growth for Brazilian e-commerce is expected to be 10-15% in 2016 and 15-17% in 2017
- Mobile commerce sales went up by 88% in Brazil between 2014 and 2015
- 23.1 million online consumers made at least one online purchase in Brazil during the first half of 2016, which is 31% higher than in the same period in 2015
- 18.8% of e-commerce transactions in Brazil in the first half of 2016 were made with mobile devices
Cross-Border Commerce Challenges
However, this rosy picture has a couple of thorns. Many merchants opt for a “cross-border” approach with Brazil, in which a transaction is captured by an international acquirer rather than a local acquirer. The problem with the cross-border approach is that it restricts merchants to only 17% of the local e-commerce market in Brazil, which is a $23 billion market. In addition, other factors hamper this approach considerably:
- 60% of e-commerce sales in Brazil are purchased through an installment plan known as parcelamento, and this is only available through Brazilian acquirers
- Non-card e-commerce payments are 25% of all e-commerce sales in Brazil and only available through Brazilian banks
- Only 20% of credit cards in Brazil are enabled for international purchases
As such, it’s crucial for any merchants wishing to take advantage of the Brazilian e-commerce market to develop a local strategy that fits shopper habits and payment methods.
While the infamous custo brasileiro describes the difficulty of doing business in Brazil—cumbersome regulation, red tape, high taxes, difficulty repatriating funds, among other challenges—there are a number of e-commerce enablers such as PayU that can help merchants. Enablers can help with advisory services to set up local payments, facilitate introductions to local attorneys, handle wire transfers out of Brazil and even official represent a merchant in Brazil in lieu of a legal entity.
Despite the available resources, merchants still need a deeper understanding of the Brazilian e-commerce market from their perspective: how to handle the key logistic and payment details that will truly allow them to leverage the market and navigate a tricky local landscape.
That’s why Americas Market Intelligence (AMI) developed a 72-page report—Optimizing E-Commerce Payments in Brazil—to offer in-depth guidance for merchants, payments officers and e-commerce leaders to avoid common pitfalls and develop powerful strategic workarounds that will deliver success in Brazil’s e-commerce market.
Contact Americas Market Intelligence to gain even more insights into the remittance and payments market in Latin America—including affluent business or consumer cards, digital wallets, merchant POS systems and more.