The Brazilian E-Commerce market is amongst the largest in the world. Therefore, many European online shops are looking to enter the Brazilian market. Our CEO, Tim Werner, was asked to give an interview on Paylobby, a German Payment Portal, about ways to expand into Brazil. Here you find an extract of the interview.
What would you recommend to a German online shop that wants to expand into Brazil?
TW: The merchant should offer his products in Brazilian Reais and allow the use of Brazilian cards for the payment process. There are many advantages. When physical goods are imported to Brazil, for now, they are tax-exempt for the merchant. At PrimeiroPay, we charge the Brazilian customer 100 Euros in Reais and pay out the 100 Euros to the merchant in Germany. That means that the shop still gets its 100 Euros, the customer can pay in his currency and use all the cards at his disposal. And the merchant doesn’t take any risks. He creates added value for the Brazilian customer who knows exactly what he must pay. The customer doesn’t have to pay taxes or any currency exchange fees and will not be surprised by next month’s credit card billing when the bank does the conversion. Also, the bank doesn’t use the exchange rate at the time of the transaction but the rate at the time of the billing, when the exchange rate can be completely different.
Does PrimeiroPay offer fixed exchange rates?
TW: Yes, we offer fixed exchange rates for certain shops, e.g. in the travel industry, for hotels and airlines. The rate holds for 24 hours. Therefore, the merchant can factor in exchange rates per day when calculating his prices and has no exchange risk. We guarantee these exchange rates.
How can a German or European shop optimize its conversion rate in Brazil?
TW: You can maximize your conversion tremendously when accepting local credit cards. Payment in instalments is also interesting. In Brazil, credit card bills can be paid in instalments. Brazilians like instalments starting at 30 or 40 Euros. Say the price point is 500 Reais and will be paid in five instalments, meaning the customer pays 100 Reais every month via his credit card payment. When the transaction takes place initially, the 500 Reais are authorized, meaning card is blocked with 500 Reais. When the customer cannot pay his credit card bills, it is the problem of the bank that has issued the card. The bank has authorized the transaction and has assured the provider or rather the merchant in Germany that the money is available.