A Brazilian merchant service provider securely processes transactions for individual companies, and as credit and debit cards become the most prominent form of payment, businesses would do well to consider providers carefully. While the ability to swipe a card is convenient for the customer, it can become costly if you haven’t spent time researching exactly what you’re paying for.
In the article, “How to Choose a Merchant Service Provider“, we advised readers what a contract with a merchant service can offer businesses, along with what to be aware of while choosing a service provider. Here you’ll find those details and instructions for merchant services specifically located in Brazil.
Much of the structure and fee categorization is similar to that of merchant service providers in the United States, but this article will draw your attention to some payment customs to be aware of as well as the technical differences overseas. Whether your company is already located in or doing business with Brazil, or you’re looking to expand your sales to the country of Brazil, this guidance can be helpful in increasing your knowledge of merchant service providers.
Fees that regularly accumulate are what make any merchant service provider costly. Unlike American merchant service providers, Brazilian providers tend to have higher rates, but less total fees.
Payment Plans
In Brazil, it is typical for companies to sell costly items using a payment plan option. Because many patrons choose to purchase something using a plan to pay it off over approximately 6-12 months, most companies include an interest rate fee in the cost of the item. The seller can determine how many months the item can be paid off within, and the payments are processed through the patron’s credit card company, not through the individual.
The patron will pay the interest at the time of purchase; however, if he or she chooses not to use the payment plan option, it is appropriate for the buyer to ask how much of a discount he or she can receive on the item for paying in full at the time of purchase. Asking for the discount keeps the buyer from paying full price along with the calculated interest rate.
The merchant has the option to include the calculated interest rate in the prices or not; they can either show that interest is included, or can decide not to show how the costs total up. Be aware that customers might be interested in receiving a discount if they choose to purchase in full.
Be sure to learn how your merchant service provider will process that transaction over time if the buyer does use a payment plan.
Different merchant service providers will charge various fees for their payment plan:
| Mercado Pago | 4% to 24.99% (24 months) |
| PagSeguro | It depends on the brand of the credit card. For VISA, it may vary from 4.5% to as much as 20.48% (over 12 months) |
| PayPal | 5.5% (for 2 payments) to 13.5% (for 12 months of payments) |
Accumulating Fees
Merchant service providers in Brazil don’t charge for a virtual terminal but they do charge a transaction fee, which is a flat rate charged each time that a transaction is processed. This fee varies and is not usually advertised. (For the definition of these terms, see our article “How to Choose a Merchant Service Provider“.
A noticeable difference between American and Brazilian providers is that there is no distinction between patrons’ cards in accumulating the credit card usage fee. This fee is a percentage of the total amount charged to a patron’s card. While some companies categorize fees for different types of credit cards, Brazilian merchant service providers make no distinction. A flat percentage rate is charged for all cards.
If your company does business in the United States as well, take note that the percentage rate is about 3% higher for all Brazilian merchant service credit card usage fees, as opposed to American usage fees.
Take a look at some of these Brazilian merchant service providers’ fees, for example:
| Merchant service provider | Usage fee | Does it change based on the number of processed transactions? |
|---|---|---|
| Mercado Pago | 4.99% | No |
| PagSeguro | 4.99% | No |
| PayPal | 5.4%-6.4% | Yes; can increase |
Transfer Fee
You also need to know if there are any fees associated with transferring your profit to your personal bank account. When a purchase is processed by a merchant service provider, the money is held by the merchant service provider. You can allow it to accumulate and make infrequent transfers to your personal bank account, or you can consistently transfer the profit into your own bank account with every purchase.
Most merchant service providers do not charge to transfer your money, but PayPal, for example, charges $3 for transfers of less than $250. Transferring larger sums of money is free. While $3 is not an exorbitant amount, it is worth looking into so the charge doesn’t add up throughout the month without your knowledge.
Bear in mind that it typically takes companies about 14 days to process the transaction, so with most companies, you can’t plan to transfer or access your profit until two weeks after the purchase.
Choosing a Brazilian Merchant Service Provider
As you make decisions about your merchant service provider, consider what kind of business you want to create. If you sell internationally, will you be able to access and organize all of your sales from one merchant service provider account, or does your provider limit you to selling only in Brazil? If you only sell within one country, is there a need to pay more to have the option to sell internationally, or would you rather cut costs by limiting your availability?
Out of the companies previously listed as examples, PagSeguro and Mercado Pago do not have the ability to sell internationally, while PayPal does. However, PayPal charges extra to expand your patronage overseas (usually about a 1% fee).
Finally, find out if the company seems credible and trustworthy. Is the company trusted in your area? Is it used internationally? Find out if other Brazilian businesses and companies use the merchant service provider that you are considering. Please remember that if you find that a company has many documented complaints, we highly recommend using another provider. Your provider will have direct access to your bank information and account, so it is critical to pay attention to valid complaints and choose a merchant service provider with a positive, established reputation.