Debit cards are extremely popular in Brazil. In 2016, the date of the last released data by the Brazilian Central Bank, there were nearly 400 million active debit cards in the country. Throughout the year, 6.8 billion transactions were made with debit cards, as opposed to 5.9 billion with credit cards. The number represented an increase of 5% in comparison to the previous year. In addition, the total amount transacted was R$ 430 billion, 10% more than in 2015.
However, in the Brazilian e-commerce environment the reality is very different. Debit card adoption as a form of payment on e-commerce websites is still low and it only accounts for about 5% of all online transactions.
How do Debit Cards Work for Online Purchases in Brazil?
Debit cards are issued by all major banks in Brazil. They are usually Visa or Mastercard labeled. However, the Brazilian label Elo is becoming increasingly popular and already accounts for 25.4% of all active debit cards in the country and 18.5% of all transactions made with debit cards. Despite its popularity, Elo cards are not enabled for online payments as of yet.
When it comes to online payments, Brazilian debit cards work in a similar manner to the 3D Secure technology. The payment method requires electronic authorization for each transaction. This is one of the main reasons behind the low e-commerce adoption of debit cards.
The authorization is a requirement by the Brazilian Central Bank as payment with debit card is considered an access to the bank account through the internet. Because of that, online buyers are always redirected to a secure page of their bank where they must input their PIN to continue.
It is no secret that adding this step to the checkout will compromise the payment experience and therefore might incur reduced conversation rates. For this reason, many shops opt not to offer debit cards as an option at their checkout.
However, debit cards are essential to grant online businesses access to lower income classes, in which credit card penetration is not as significant. Furthermore, debit cards also provide security for merchants in terms of chargeback rates. Because the payment flow requires the buyers’ identification by PIN authorization, there is practically no risk of chargeback. When compared to boleto bancário, which also facilitates receiving payments from buyers who do not own a credit card, debit cards have the advantage of providing instant payment confirmation.
Debit Card Payment Processing by PaBrasil
PagBrasil was one of the first payment providers in Brazil to bet on debit cards for e-commerce payments. When PagBrasil processes a transaction made with debit card, the debit is reflected immediately on the buyers’ account. At the same time, PagBrasil instantly confirms successful payments to the online store via API. Currently, debit cards from all major Brazilian banks can be processed through PagBrasil’s platform:
- Banco do Brasil
- Caixa Econômica Federal
- Banco de Brasília
- Banco da Amazônia
- Banco do Nordeste
If you are interested in knowing more about debit cards and other alternative payment methods for your Brazilian e-commerce website, contact us.