Nearly half of major online stores offer discounts to customers who use the instant-payment system
01/15/2024
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Gastão Mattos — Foto: Carol Carquejeiro/Valor
From different discounts to free shipping, the benefits offered in e-commerce for customers who choose to pay with Pix are progressively increasing. In early January, nearly half (47%) of the country’s large online stores offered some kind of advantage for customers using Brazil’s instant-payment system, according to a study carried out by Gmattos Pagamentos consultancy reviewed by Valor. The survey also reveals a decrease in the number of interest-free installments offered on credit cards. Experts see price reductions for cash payments as a healthy market trend.
The trend to promote Pix payment is a result of lower costs for retailers and advantages to their cash flow, as the money is made available immediately. There is also a high level of conversion in the shopping cart. Sales that actually occur after the customer adds the items to shopping cart exceed 90% on Pix, the consultancy notes. With a credit card, the conversion rate is around 70%, compared to 50% for boletos (bank-issued invoices) and 30% for debit card transactions.
The survey included 59 major online stores in the Brazilian market in the January edition and has been carried out bimonthly since 2021. Since September last year, Pix has been offered as a payment method in all stores surveyed, just like credit cards, that was the leading payment method in e-commerce until then.
Until early 2023, research showed some fluctuation in retailers’ incentive to use Pix. Since May, however, the percentage of businesses offering advantages for customers using Pix has been steadily growing. At that time, the offering of benefits involved 30% of stores surveyed. The percentage observed in January even exceeded that seen on Black Friday (46%), although during the promotional date discounts were greater, ranging from 10% to 15%. This month, discounts ranged from 4% to 12% and there was also free shipping offers in some cases.
“I believe the incentive to use Pix will continue to grow. Our view is that retailers were very engaged,” Gastão Mattos, co-founder and CEO of Gmattos, said. “Given the advantages it offers, offering different prices makes sense,” he adds.
Although Pix first became popular in transfers between individuals, transactions from people to businesses have been growing each month. In December, these transactions accounted for 36% of total operations. A year earlier, this share was 24%, according to Central Bank data.
Maurício Salvador, president of the Brazilian E-Commerce Association (ABcomm), points out the discount offer for customers using the instant payment system is not restricted to large online stores; it’s widespread across the Brazilian e-commerce. “On the one hand, Pix became popular among customers. On the other hand, it has a direct positive impact on the retailers’ cash flow. Furthermore, shopping cart abandonment is much lower and there is no risk of chargeback,” he said, on a reference to refunds on credit card purchases after dispute.
When accepting payment via credit card, the retailer has to bear the MDR costs (a discount rate charged by the acquirer firm), in addition to the cost of factoring of receivables in order to receive the money immediately. The greater the number of installments, the higher the costs are. Bank-issued invoices remain resilient in e-commerce—with 62.7% of surveyed stores offering this payment option in January—but has an average confirmation of receipt period of two business days, which affects sales flow.
The survey also revealed that, while the advantages for using Pix grow, the number of interest-free installments offered on credit card payments falls. In January, the average term was 5.4 times, compared to 5.7 times in the previous survey, carried out during Black Friday. A year earlier, the average was around 7.4 interest-free installments.
The discount offered in payment via credit card in one single installment is still low and was observed in only 5% of stores in January. However, Mr. Mattos notes this could be a trend in promotional strategies, given the retailers’ movement to reduce the number of interest-free installments. “Just as the discounts on Pix grew, discounts on a single installment on credit card should also start to increase, even if they’re smaller. It’s a healthy trend,” Mr. Mattos said.
Interest-free installments were in the spotlight last year amid discussions about measures to help reduce revolving credit interest rates, and the topic is expected to remain on the agenda. Carla Beni, an economist and MBA professor at FGV, says the option has become a habit in the Brazilian market, but she notes it is important that consumers understand there is no such thing as interest-free installments. As she explains, if there is no explicit fee, that is because the customer is not getting a discount on cash payments. “There is the normalization of interest rates embedded in the installment.”
In the professor’s opinion, part of consumers is willing to pay in cash if there is a discount, and the practice can help bring up discussions involving financial education. “Offering a discount on cash payments helps the retailer build customer loyalty and become less dependent on factoring of receivables,” she adds.
The evolution of payment transaction initiators (ITPs), a feature that allows the user to operate their account outside the financial institution’s environment, as well as the launch of Automatic Pix, scheduled for 2024, should help increase momentum for instant payment in digital transactions.
The possibility to pay in installments and a more fluid experience are currently the biggest factors for credit card differentiation in the online world, in addition to the chargeback. Pix has a special refund mechanism, aimed at facilitating a chargeback in the event of fraud or operational failure, but the Central Bank points out that cases of commercial disagreement are not part of the rules and must be dealt with directly by the parties.
Although installments via Pix have not yet been officially implemented, several businesses have been offering purchases with alternative installments to credit card, in many cases using instant payment options. According to the Gmattos study, 39% of the stores surveyed offered payment under the “buy now, pay later” option. That was the highest level of acceptance since records started, and the numbers are expected to remain up.
Debit-card payments, the modality that has lost the most space in e-commerce since the launch of Pix, in November 2020, was offered by only 20% of stores in November. Digital wallet payments were accepted in 42.4% of businesses. The highlight was NuPay, digital bank Nubank’s online payment solution, which has established as the second digital wallet in market presence, second only to Paypal.
*Por Mariana Ribeiro — São Paulo
Source: Valor International