Several different payment methods are accepted in Brazil, both online and offline. In this article, we will take a look at all payment methods accepted in Brazil.
Debit and credit cards
Debit and credit cards were used in 37% of all Brazilian payment transactions related to consumption in 2013. According to a report by Banco Central do Brasil, which is Portuguese for Central Bank of Brazil, Bacen, there were more than 106 million active debit cards and more than 87 million active credit cards in Brazil at the end of 2013. Also, 64% of all Brazilians over the age of 18 had a debit card, while 50% had a credit card. Furthermore, debit and credit cards are the most commonly used payment methods when it comes to the payment of goods or services with a total cost of more than BRL 50. Thus, debit and credit cards are commonly used more for paying at or for:
This payment method accounted for transactions worth BRL 853 billion in 2013, a growth of 17,8% when compared to 2012. While debit cards grew 22,5% in 2013 and accounted for transactions worth BRL 300 billion, credit cards still have the upper hand, growing 15% and accounting for transactions worth BRL 553 billion in 2013. As for the total amount of transactions, a growth of 14% was observed, amounting for 9,9 billion transactions with debit or credit cards. This payment method is expected to process transactions worth more than BRL 1 trillion in 2014, due to the sector’s investment to increase market penetration.
The following card networks are used in Brazil:
- American Express
- Cartão BNDES
- Diners Club
Cheque especial, which is Portuguese for Overdraft, is increasingly being used by Brazilians as a way to easily obtain more credit. According to a survey by Meu Bolso Feliz, a website created for promoting financial education, almost 40% of all Brazilians owning a credit card made use of Cheque especial in 2013. Bacen discourages this practice, as it is a way to battle growing insolvency and raised its interest rate to more than 190% per year.
According to a survey by Bacen in 2013, cash is still pointed out as the preference for the Brazilian population when it comes to payment of goods or services with a total cost of up to BRL 50. Thus, cash is used more as a payment method in specific niches, such as:
- Bakeries, restaurants and cafeterias
- Purchase of fuel
Cash is still very important for the Brazilian market. Even though the number of people that have a bank account has increased over the years, 51% of the population still receive their salaries in cash, especially those who perform low-paid jobs such as housekeepers and handymen.
Another reason for the importance of cash payments in Brazil are the incentives that this payment method receives:
- Eliminating the payment of interest rates charges when paying with credit or debit cards
- Established minimum price necessary to perform a payment on debit or credit cards in some premises
Cash payments are also encouraged by stores that often give discounts for payments in cash. This is normally done to avoid paying the credit card processing fees as well as avoid the long settlement time on credit card payments.
Practically eliminated in some countries, cheques are still used in Brazil, even though they are not as common as credit cards. Only 7% of Brazilians still used cheques as a payment method in 2013, a smaller number when compared to 14% in 2010. One of the main reasons why cheques are being used less is because they were used for buying the same goods that are most commonly bought with credit and debit cards: appliances and electronics.
Besides the competition with other payment methods, such as credit and debit cards, cheques also face a discouragement from the government. In 2010, there were 70 million bounced cheques. In an attempt to promote safety to both customers and entrepreneurs, the Conselho Monetário Nacional, which is Portuguese for National Monetary Council, demanded that banks are stricter regarding check issuance. The purpose is to avoid fraud and to prevent the use of the cheques by third parties.
Boleto Bancário is an official push payment method regulated by Bacen, and is a payment process similar to wire transfer or cash payment methods. Consumers are provided with a type of bank slip proforma invoice that is already completed.
The Boleto Bancário can either be delivered in paper form like a regular invoice or be generated digitally from a webshop.
With a printed Boleto Bancário it is possible to make payments at the following locations:
- With cash at any bank agency or at authorized processors such as drugstores, supermarkets or post offices
- At any ATM or via internet banking
A Boleto Bancário can also be paid online with the online banking service provided by the consumers bank.
It is a payment method carried out totally by the consumer, and it relies on the consumer to initialise the payment action. Once a Boleto is paid by the consumer, a clearing confirmation is issued the next day by the bank. Boletos have due dates, up to which payment is possible but the way due dates are enforced are different depending on the location where the payment is processed.
The main disadvantage of paying with Boleto Bancário is that it interrupts the consumer’s impulse, as only around 50% of issued Boletos are paid. There are no direct negative consequences for the consumer if payment is not realized.
As of 2013, Boleto Bancário in Brazil was used for more than two billion financial operations.
Carnê is an answer to the rise in interest rates and the stricter requirements applied by major banks granting credit as a result in the rise of insolvency in Brazil. Although Carnê still has interest rates applied to the total amount before it is divided into several installments, it is still a better option for low-income customers. Originally, Carnê was offered in the form of Boletos by major appliance stores such as Casas Bahia and Ponto Frio. Lojas Cem, another major appliance store, stimulated successfully the use of Carnê by consumers and now it represents more than 60% of the total amount of purchases.
All installments are organized in a book similar to a chequebook, where each page contains one invoice that corresponds to the amount of the installment to be paid that month. Every month customers have to go to the store to pay their installment and therefore, is a method that builds customer loyalty.
Crediário is an automation of Carnê and refers to payments made with credit cards in up to 48 installments, when purchasing goods and services that are often subject to interest increases in the price of each installment.
The use of Crediário has been stimulated since 2012, in an attempt to increase the number of purchases by credit cards and split across several installments. In 2012, 70% of purchases made with credit cards were paid in one installment, compared to 55% in 2005. Used slightly more by social classes with lower incomes, Crediário is used by an average of 10% among all credit card users in Brazil.
In Brazil there are several different types of allowance tickets. Be they for public transportation, food, books, cinema and theatres, their use in general is growing. While in 2010 only 2% of all purchases made without cash were realized with allowance tickets, this number reached 4% in 2013. One of the main reasons why there was a growth in the use of allowance tickets as a payment method is because part of an individual's salary is generally given through allowance tickets. Also, some discounts, like for public transportation, can only be awarded to those using allowance tickets.
In Brazil, Débito Automático, which is Portuguese for Direct Debit, is becoming increasingly more common as it represents a way to make sure that bills are paid and also saves time for its users.
While in 2010, only 5% of Brazilians used Direct Debit as a payment method, more than 11% used it in 2013.
Methods for Online Payment
Brazil is the the seventh largest economy in the world and is the most relevant and mature e-commerce market in Latin America, being responsible for 40% of the region’s online market, reaching the USD 20 billion mark in 2013. In fact, Brazil accounts for 40% of all internet users in Latin America and is the 5th largest digital market in the world.
Online payment in Brazil is made mainly by two means: Credit Cards and Boleto Bancário. The two payment methods account for more than 93% of all online purchases in Brazil. Although credit cards have the upper hand, representing 69% of the total, only 21% of the total are international credit cards, while national credit cards account for 48%.
Cielo and Rede, which used to be exclusive acquirers on behalf of Visa and MasterCard respectively, dominate the use of credit cards in Brazil with respectively 50% and 32% of credit card online payments. Five new companies - Elavon, First Data, Global Payments, Santander and Stone are now entering the market.
Although credit cards are still the preferred online payment method in Brazil, Boleto Bancário is the main alternative payment method for online customers. Boleto works like a cash payment that allows customers who don’t have a credit card to buy online. This payment method accounts, for around 24% of the market and in industries with higher ticket sizes its relevance can reach up to 37% of all online purchases.
Apart from these, online debit accounts for 4% and Cash on Delivery - COD - account for 3% of all online payments.