SaaS Conversion Rate: Brazilian Market Analysis
With the global SaaS market projected to reach $908.21 billion by 2030, it’s safe to say that the competition level will go straight through the roof. And since there are 30,000 SaaS companies worldwide, this certainly gives credibility to the whole idea.
The United States, with its massive 17,000 players in the market, is a valid example of the intense competition that exists. But for ambitious entrepreneurs seeking new opportunities within the Latin America landscape, Brazil shines just as bright as the North Star.
While it displays an impressive growth rate, its SaaS landscape remains relatively uncrowded, offering a chance to stand out through increased sales and capture market share.
But to take advantage of this opportunity, you need to be prepared in terms of payment systems and infrastructure to allow you to keep your conversion rates at an all-time high. After all, what are online payments if not proof of profitability?
From payment processing to access to the most popular payment methods and complete tax and compliance management, the Merchant of Record.
In this article, we plan on looking at the Brazilian SaaS landscape and discussing how merchants can make the most of its revenue potential. We’ll be exploring:
Brazil SaaS Market Overview
Looking to expand to new territories? Eyeing Brazilian consumers? Well, no surprise there.
After all, Brazil is the world’s fifth-largest country and the ninth-largest economy.
But there is more to this market that draws SaaS entrepreneurs to it in such large numbers, and we will find out exactly what triggers so much interest.
Before we dive into this market overview, let’s understand exactly why this is even relevant in the first place.
Brazil has a population of 217 million, and while this can be interpreted as a massive audience of potential customers worth tapping into, it also means there are many payment preferences amongst this amount of people.
In Brazil, more so than in other global markets, customizing your payment options can significantly help boost conversion rates. By adequately satisfying the payment needs and preferences of your audience, Brazil has the potential to reward your efforts more generously than other regions, meaning your online purchase will grow at an impressive speed.
Local Currency and Exchange Rates
Today, we look at the Brazilian market and see a thriving tech landscape, a true magnet attracting VC investors, but it wasn’t always like this.
Up until 1994, when the Brazilian Real (BRL) was “crowned” as the country’s new currency, Brazil struggled through different reforms to obtain a strong and stable economy which is now thriving. The Brazilian Real went through different phases, but since 1999, it has been floated to the USD.
One thing you may not know about local currencies is their fixed or floating nature. A fixed currency has static exchange rates assigned by the government, whereas a floating one changes and is set by the Forex market, with the purpose of stimulating economic growth.
But it’s relevant to point out that in many cases, they use an alternative currency exchange rate called the tourism exchange rate. Foreign businesses can easily be tricked by this and lose money — it even has a separate symbol.
Payment Method Analysis
Customers around the world have different payment preferences. Everyone knows that.
But given its large population, Brazil is an example where offering alternative payments makes a remarkable difference. Localizing payments for your Brazilian customer base can lead to a significant increase in the conversion rate. For instance, SaaS businesses that offered Bolleto or credit card installments as alternative payment methods noticed a 90% higher conversion rate.
In terms of payment methods, here is a short rundown of the top options in Brazil:
Payment Method | Popularity
- Domestic-only Cards only — 44.7%
- Pix — 23.3%
- Digital Wallets — 10.6%
- International Credit Cards — 9.8%
- Debit Cards — 1.3%
- BNPL — 0.5%
- Bank Transfer — 0.5%
Subscription Vs. One-Time Payments
With 88% of consumers saying they’d commit to a recurring service, we are noticing the rise of the subscription business model in the Brazilian market as opposed to one-time payments.
In the context of more and more subscribers feeling overwhelmed by the large number of services they’ve subscribed to, especially during the pandemic period, the fact that Brazil is now embracing this model comes as a huge opportunity for SaaS merchants.
Brazilians are now spending an average of R$225 monthly on recurring services, with digital leading the pack.
Subscription Vs. One-Time Payments
With 88% of consumers saying they’d commit to a recurring service, we are noticing the rise of the subscription business model in the Brazilian market as opposed to one-time payments.
In the context of more and more subscribers feeling overwhelmed by the large number of services they’ve subscribed to, especially during the pandemic period, the fact that Brazil is now embracing this model comes as a huge opportunity for SaaS merchants.
Brazilians are now spending an average of R$225 monthly on recurring services, with digital leading the pack.
Market Highlights
Since the Brazilian market is filled with opportunities for SaaS businesses, including it in your growth plans is, by all means, a wise strategic step.
Here are a few things to bear in mind:
- Pix, the real-time payment system, revolutionized the Brazilian payment landscape and continues to grow in terms of popularity. Plus, even though it cannot currently support recurring transactions, this feature will be available later this year, and we can certainly expect a boom in terms of popularity.
- In Brazil, Mastercard payments represent 45% of card payments.
- The regulatory landscape remains cumbersome, making the launching of a business a time-consuming process.
- Security and data privacy are key concerns for Brazilian customers, therefore, ensuring compliance with local laws is essential.
- In 2022, the Brazilian SaaS market was worth $3.9 billion.
- Some of the emerging trends in the Brazilian market are Artificial Intelligence, Machine learning, and mobile-first and subscription-based pricing approaches.
Learn 5 tips to boost conversion rates in Brazil on PPG blog.
