Committing to a subscription is becoming a habit for consumers all over the world. And in the Brazilian market, this is no exception: according to the Associação Brasileira de Comérico Eletrônico (ABComm), subscription clubs transact at least BRL 1 billion yearly in the country.
As online shopping strengthens in Brazil, with revenue forecasts reaching BRL 90 billion, subscription-based businesses also thrive in this scenario. According to the Statista Global Consumer Survey, 50% of consumers in Brazil have spent money on digital video content via a subscription; another 35% have spent money on digital music content via a subscription. In addition, StartSe has showed that the leading startup business types attracting the attention of investors in Brazil are SaaS (15.1%) and digital subscriptions (14.8%), followed by mobile apps (12.9%).
Streaming services and media content help drive adoption, encouraging new subscription-based businesses to emerge. Companies such as Wine, Tag Livros, and Glambox are examples of thriving businesses in Brazil that deliver physical goods every month.
The role of alternative payment methods in the Brazilian subscription economy
Nearly every business working with recurring payments can benefit from the subscription economy in Brazil. However, companies should consider expanding their payment offerings in order to reach a larger number of consumers.
Although credit cards are the most popular payment method in Brazilian ecommerce, representing 69% of consumers’ preference, the boleto bancário comes in a close second: 52% of ecommerce users in Brazil have made a purchase with this payment method. The boleto bancário not only caters the unbanked population in the country but is also a popular alternative among Brazilians for a number of reasons. Low credit card penetration is one of them: in 2017, approximately 27% of Brazilians owned a credit card – and, many times, the limit available is too low to complete a purchase. This makes consumers turn to the boleto, as it is payable either online or in cash at banks and lottery agencies.
Therefore, it makes sense that businesses working with a subscription model offer recurring payments with boleto bancário: it is an excellent alternative for customers who do not own a credit card or those who do not wish to compromise their limits. Further, Brazilians are used to this payment method when managing their financial lives: regular expenses such as rent, electricity and internet are usually paid by boleto.
In addition to boleto bancário, businesses can also offer debit card recurring payments. With the 3DS2.0 protocol being implemented in the country, debit adoption is likely to increase in Brazilian ecommerce, and subscription business models will follow. The number of ecommerce businesses in Brazil offering debit has already grown substantially over the years, with a 70% growth from June 2018 to June 2019, according to Visa Consulting & Analytics. With the new protocol, debit transactions in ecommerce will be even safer and offer Brazilians a much better payment experience.
And let’s not forget about PIX, Brazil’s instant payment systems developed by the Central Bank of Brazil, which is due to be launched on 16 November. The solution will allow transactions to finalise on an average of 2.5 seconds and will confirm payments instantly, 24 hours a day, 7 days a week. PIX will be free of charge for payers and will not be limited to the banked population, as users will also have access to the new payment method through e-wallets.
Paying with PIX will be quick and easy: payers simply scan a QR code using their smartphones to complete a transaction. They will also be able to use a PIX key – such as the receiver’s cell phone number or email.
For ecommerce transactions initiated on a computer the payment process will be very similar to a physical store. The user selects PIX at the checkout page and a QR Code is displayed on the PC screen that can easily be scanned by a smartphone’s banking or digital wallet app. Before confirming the payment, the transaction details will be displayed for verification.
For mobile purchases, the process is slightly different and even simpler: after selecting PIX as the payment method of choice, the screen will display all PIX supporting apps installed on the users smartphone. Buyers will then select the preferred app and the details of the transaction will appear on the screen for confirmation.
PIX will encourage shopping by impulse and provide a better customer experience: with payment confirmation occurring within seconds, the service can be made available immediately for the customer and products may be sent right away.
Offering alternative recurring payment methods not only helps businesses reach more consumers, but also drives inclusion, enabling millions of consumers in Brazil to take part in the subscription economy. In a country where 45 million adults do not have a bank account, and where 71% of the population prefers to pay in cash for their daily purchases, offering alternative payment methods that cater to consumers’ needs is crucial.
About Ralf Germer
Ralf is CEO and Co-Founder of PagBrasil. His fields of expertise are business management, international business development, marketing, online sales, and payment processing. Prior to PagBrasil, he was Vice President of Product Marketing Europe at Actebis and later founded 4M Iberoamérica.
About PagBrasil
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