Buy Now, Pay Later (BNPL) is one of the biggest trending topics in the payment ecosystem, as the number of people using the system grows across Europe and the US. Instalment payments are already a popular way of increasing purchasing power for both physical and online store sales in Brazil and other Latin American countries, especially for higher average ticket purchases.
In Brazil, people most often use their credit cards to pay in instalments, using their credit limit to make purchases, which blocks their funds until the instalments have been paid off. According to the Credit Protection Service (SPC Brasil), credit cards are one of the most popular payment methods in Brazil, with 52 million users, representing around one quarter of the country’s population. This figure shows a large proportion of the population still lacks access to credit cards, with 34 million Brazilians currently underbanked – mainly due to a lack of formal employment and high annuity fees, among other factors which restrict their access to credit.
However, an individual does not need to be a financial institution customer or have a specific purchase limit in order to use BNPL. This allows people without access to credit cards to make purchases in instalments, which can be paid through boleto, bank transfers, or Pix, for example.
Connecting BNPL to the Pix platform
Pix, the instant payment method developed by the Central Bank of Brazil, continues to innovate. Since its launch in November 2020, Pix, a payment method that offers full interoperability between banks and fintechs, is changing the Brazilian financial system, breaking records and gradually introducing new features to customers who continue to embrace it. ‘Guaranteed Pix’ is one of the new features introduced.
Guaranteed Pix lets bank and fintech customers obtain credit for instant payments repayable in 12 to 24 interest-free instalments, similar to the BNPL method. Also known as Pix credit, this function is set to launch in the second half of 2022, although it has already been included in some banks’ portfolios.
The difference between this feature and Scheduled Pix – in effect since 2021 – is that the recipient is informed of the scheduled date, which cannot be changed. The guarantee is provided by the intermediary bank, which is liable for the payment even if the account does not have sufficient funds. This is a significant benefit for Brazilians without access to credit cards and to advantages like instalment plans, who face difficulties in purchasing products, especially when it comes to higher ticket items, which affects purchasing power.
The new feature Guaranteed Pix benefits store owners because it offers lower transaction costs – meaning that the products can be sold at lower prices – and due to the fact that these owners can obtain advances on their credit portfolio at a lower rate of interest than credit cards offer. Consumers mainly benefit from the ability to make higher average ticket purchases in instalments, without jeopardising their budget.
The BNPL credit analysis is carried out online and is based on personal information such as Taxpayer’s Registration Number (CPF), telephone number, and other data. This enables real-time credit approval and speeds up the purchasing process.
More solutions available in Brazil
Despite originally starting on digital platforms, BNPL is also available for transactions in physical stores that are integrated with this payment system. Some banks and fintechs, such as ADDI from Colombia and Brazilian giant Nubank (with their recently launched NuPay solution) already offer this payment method. Consequently, now, more than 54 million Nubank customers can make debit payments or pay in up to 24 interest-free instalments directly from their Nubank app. This will also affect cross-border operations, with NuPay now one of Bexs Pay’s various Brazilian payment options. According to the 45th Webshoppers survey by NielsenIQ Ebit, cross-border transactions are becoming increasingly important for ecommerce and grew 60% on a revenue basis in 2021.
The new feature is set to become well-established in the years ahead
While BNPL already has a share of retail sales in many countries, it still is a novel concept in Brazil. However, the clear advantages to store owners and customers alike, such as greater purchasing power, streamlined operational processes, lower intermediation costs, anti-fraud measures and chargebacks, and the consequent increase in approval rates, showcase the solution’s significant potential in Brazil.
This positive trend is supported by players with large customer bases entering the market and integrating with the Pix platform, which already has over 124 million users in Brazil. As people gain more access to the system, domestic and international businesses can more effectively reach a country the size of a continent that is home to 212 million people.
About Vinícius Vieira
With over 10 years of experience with Global Payment Processing, Vinícius' fields of expertise include innovation in digital payments and fintech, global acquiring, multi-currency payment processing, cross-border payments in Brazil and Latin America, and product and business development. At Bexs Pay, his main challenge is to lead commercial growth while streamlining innovation and technology – which, through payment transactions, facilitate access to global goods and services for Brazilians and the best of Brazilian goods and services for the world.
About Bexs Pay
Bexs Pay is a cross-border payment service provider for international businesses. Through our API platform, our solution provides a unique combination of payment processing, payouts, and FX for digital companies looking to operate in Brazil and receive and send payments to individuals or companies, without the need to establish a local entity. Our daily goal is to bring payments innovation and technology to facilitate Brazilians' access to global goods and services.
Bexs Pay payment platform is connected with Bexs Bank's financial services, allowing our partners to control FX transactions in real time with predictable settlement. Unlock the Brazilian market as a local player with Bexs Pay!
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