Key Considerations for Expanding E-Commerce Into Brazil: Payments, Fraud and Taxation
Card payments are usually restricted to domestic settlements in local currency. Therefore, U.S. merchants that wish to sell their products and services to Brazilian consumers should also offer local payment methods in order to include the 64 percent of prospects that don't own a cross-border enabled credit card. Otherwise, they risk a large fall-out rate for transactions that cannot be processed. Some popular local purchasing cards include AURA, Elo and Hipercard.
Boleto Bancário is another popular local payment method in Brazil, accounting for around 75 percent of online payments. It's overseen by the Brazilian Federation of Banks FEBRABAN. Merchants may generate and issue a financial document called Boleto, which can be considered as a proforma invoice. It's a consumer cash-in payment, which relies on the consumer to initialize the transaction. Boletos can be paid at ATMs, via internet banking, and at post offices or bank branches, and merchants will be notified accordingly.
Brazilian consumers also expect online bank transfers as a choice of payment. These are facilitated via dedicated websites hosted by Brazilian banks. After choosing this payment method online, consumers are redirected to the internet banking platform of their bank to finalize the transaction. Online bank transfers are often used in order to pay a Boleto.
Other online payment methods such as e-wallet solutions and direct debit don't currently have much traction in Brazilian e-commerce.
While fraud is obviously a key consideration when expanding into new markets, e-commerce in Brazil is fairly well protected against fraud. Brazilian consumers are usually required to state their 11-digit tax ID (CPF) and telephone number at checkout online. The CPF can be validated via an algorithm and queried against public databases. In addition, most credit cards can only be used domestically and are therefore not a prime target for criminals. Thus, online fraud is mostly limited to so-called "friendly fraud," where consumers might initiate chargebacks claiming a failed delivery of services or goods.