Just 10 years ago, Brazil was enjoying strong growth, with the GDP rising 3+% year over year. That growth gradually slowed until it came to a screeching halt and reversed in light of the corruption scandal that plagued the country in 2015. Brazil’s GDP dropped 4% in the aftermath, but that is not the end of the story about Brazil’s place in the global ecommerce market.
Commerce – and especially ecommerce – is looking to soar again and will, with a little luck. The country has a lot going for it, including a well-educated population and a flurry of startups storming the scene in recent years. These are small but significant steps that are contributing to growth in the country, including eCommerce growth of 8.6% in 2016.
Brazil offers an appealing card-not-present (CNP) landscape to US businesses looking to expand abroad:
- 62% smartphone penetration
- 68% of Brazilians have an account with a financial institution as of 2015
- 77% of transactions are made with chip cards
- 36% of transactions are made with credit transfers
- 91% growth of ecommerce between 2011 and 2014
- 19% of ecommerce transactions are made via mobile device
Global Considerations
Global expansion and the need for seamless cross-border payments should be top-of-mind for CNP merchants, especially merchants with complex business models. The global ecommerce market is expected to expand 104% by 2020. There are over 1 billion online shoppers worldwide and forward-thinking CNP merchants are finding ways to streamline and localize the ecommerce experience for shoppers abroad. There are several considerations for merchants to consider.
Currency Options
Once your online business expands across borders, you have a whole new potential customer base: the global ecommerce market. The catch? You also have a whole new world of competitors. A way to stand out from the competition is to offer local currency options for online payments. This requires an international payment gateway solution that enables you to process payments in multiple currencies with settlement in USD.
Dynamic Currency Conversion
Processing payments internationally can get tricky. There are fluctuating exchange rates and currency conversion rates to consider. This requires some knowledge of both to set appropriate prices for international sales. Merchants may opt to work with a an experienced global payments partner that offers dynamic currency conversion to simplify the process.
Authorization/Settlement
This can be confusing territory for merchants new to the global ecommerce market, especially US merchants choosing to operate internationally. Many try to manage multiple banking relationships with multiple payment processors throughout their countries of operation. This comes with a lot of red tape, a lot of paperwork and often, a lot of confusion. In the worst case scenario, it can lead to termination by one or all of a business’ payment processors. The best option is often to work with a digital payments advisor who can manage those relationships on behalf of the business to simplify operations, obtain the best card approval rates and avoid foreign transaction fees. This type of digital payments advisor will review your business model and its unique requirements, evaluate where the bulk of your customer base exists and plan how much volume you will need in various location to support growth and manage risk. This option allows merchants to expand quickly, and without jeopardizing their current merchant accounts.
Whether you’re entertaining the idea of expanding to Brazil – a plush part of the global ecommerce market with unlimited potential to grow quickly over the next several years – or you just need some guidance or a roadmap for general cross-border optimization, there are plenty of resources and vendors available. Working with an experienced payments advisor to coordinate global expansion can ease the burden on your internal resources while ensuring that your payments operation is optimized and secure.
Looking to expand throughout the global ecommerce market and need help with your cross-border strategy? Contact us today for a free consultation.
