How to boost your ecommerce sales in Brazil and Latin America
In the U.S., everything is paid for with a credit card. Some even choose to swipe a card when purchasing a lone candy bar at CVS than carry change. However, there are still parts of the world where people don’t have a bank account, let alone a credit card. There are also those who have both but are leery of online transactions.
In Brazil, more than half of its population has access to the internet — with accessibility projected to rise 7 percent every year. Of them, 87 percent of the users belong to at least one social network. The nation is also the 10th largest ecommerce market in the world with $18.8 billion projected sales (excluding travel related products and services) in 2015 — an increase of over 20 percent from 2014. Yet, research conducted by E-bit indicates that only 4 out of 10 Brazilians shopped on international ecommerce sites in November and December of 2014. Why?
Countless Brazilians don’t have credit cards and the few who do are restricted on global websites by their local credit cards. Amonst the minority who have international cards, many feel uncomfortable sharing their bank account details directly on foreign websites. Nevertheless, they enjoy online shopping. And really, who doesn’t? Whether buying the new NBA2K16 or those cute fall boots discovered on Pinterest, long lines and the Saturday morning crowds can be avoided by shopping online. The cherry on top for global e-retailers? In Latin America, foreign websites are favored: they frequently offer more competitive prices, items that have yet to be released in their homeland can be purchased early, and products released exclusively in other nations are accessible.
However, international e-commerce sites are missing an enormous chunk of this target population because of the limited forms of payments they allow. By adopting regional payment methods, these merchants can access untapped target markets. Vendors can expand their reach in previously inaccessible areas and drastically enlarge their customer base. In turn, shoppers have a greater variety of merchants and products to select from.
In addition to ecommerce, SaaS (Software as a Service) companies are also missing a huge target market. As a predominantly B2B industry, it is hard to reach businesses that don’t have international credit cards. In many cases, the owner or an executive will use a personal credit card for business purposes and will later be reimbursed by the finance department. Not only is this inefficient and time consuming, it can also create disruptions in reoccurring monthly payments for both customers and merchants.
In Brazil, the largest economy in LATAM, the Boleto Bancário is the most popular alternative payment method. It is a purchase slip similar to an invoice that can be paid at local authorized supermarkets, drugstores, post offices, or online. It allows the 15 year old Justin Bieber fan, without access to a credit card, to subscribe to premium music and pay the boleto at a local store. In 2013, more than 2 billion transactions were conducted through Boleto Bancário. Webshoppers Research data shows that it is the fastest growing method among international merchants in Brazil.
Credit cards are popular in the U.S. because of the need to build a good credit score. While that concept is essentially nonexistent in LATAM, paying in installments is extremely entrenched in the culture. Hence, another popular payment method in Brazil is local credit cards. By saving money each month, they can pay for more expensive products over a period of time. Therefore, the Bieber fan’s mom can buy an iPod on AliExpress with her local credit card and pay it off in installments.
By allowing regional payment methods, a company can boost its sales and broaden its target audience substantially. The expanded target market can include those too young to have their own credit card, those too distrustful of processing via international methods, and those who just prefer a more traditional form of payment like cash.
How can an international business offer local payment methods?
Foreign ecommerce businesses attempting to enter the Brazilian or LATAM market will have a smoother transition by partnering with a local expert. EBANX, a global financial group with Brazilian DNA, enables consumers to purchase online from merchants around the world using their preferred local payment methods. As a leader in cross-border payment processing for e-commerce merchants selling to LATAM, we provide the simplest and most tax efficient business model. EBANX can help your understand and process payments in Latin America without any hassle.
Want to know more about our solutions? Get in touch!