The Brazil Olympics are just around the corner and preparations are at a fever pitch. Projections speak of an estimated 400,000-500,000 international visitors that will visit the country during the month of August, based on trends observed in recent summer editions of the Olympics. Inbound travel to Brazil is expected to increase by an estimated 1.2 million travelers for the year, compared to the 2010-2015 average, primarily due to preparations for the Olympics Games.
The largest share of travelers to Brazil is expected to come from Latin America and the Caribbean region (45%), followed by Europe (30%) and finally North America (15%). Based on historical data from past Olympic Games, Brazil can expect to see an increase in per traveler spending. During the London 2012 Olympic Games, spending averaged $1,830 per traveler, which was twice as much per visit than regular tourists to the UK in 2012.
While all these numbers are inspiring, the bad news is that Brazil is in the midst of a deep recession and political upheaval that recently led to the removal of Dilma Rousseff from the presidency. Moody’s stated that the Olympics are neutral for Brazil’s sovereign credit quality, and Brazil’s economy will probably contract by 3.7% this year.
Although the jury is still out as to whether the Olympics will serve as a vital lifeline or a costly folly, there is one aspect that inspires universal agreement: Olympic participants, hundreds of thousands of visiting fans, and even native Brazilians need to feel secure and comfortable when making purchases in a country well known for its credit card cloning activities.
Payment entities and retailers who put enough thought into Olympic-related commerce stand to reap substantial profits. It all depends on the merchants’ ability to gain an edge over their competitors and run for the gold. So let the games begin!!
Scoring Payment Goals
The Olympics offer a unique opportunity to try out new payment methods at a multinational venue with a huge volume of transactions. Out-of-the-goal box thinking can facilitate a safe payment process that mitigates fears of cloning and promotes sales.
Here are several examples:
Virtual payments: A leading credit card scheme announced the launching of a virtual payment solution that will serve as a prepaid card that can be loaded through a bank slip and debit card. The card, which will be available for both online and in-store purchases, protects the user against false transactions resulting from hacking.
Wearable tech payments: In order to facilitate a safe payment process, the company also announced a new post-password wearable tech solution in the form of a NFC based payment ring that syncs directly with the user’s credit card account.
NFC-enabled payments: 4,000 NFC-enabled payment terminals are to be installed across the city’s Olympic facilities, enabling quick and secure payments with little hassle or risk.
Payment Tips for the Olympic Retailer
Retailers who are focusing on Brazil in the coming months should keep in mind that whether the consumer is a tourist from some other location or a native Brazilian, unfamiliar payment methods may cause shopping cart abandonment.
Acquaint yourself with local Brazilian payment processes: Offering special Olympian sales is a great idea but approach this with caution. Be aware that the most common online payment method in Brazil is credit cards. In fact, they are used in 69% of all transactions. But no less important is the fact that the retailer must differentiate between national and international credit cards.
National cards vs. international cards: National cards can only process in Brazilian Reais (BRL), whereas international credit cards can process in both foreign and local currencies. Due to the fact that only 20% of Brazilian buyers have access to international credit cards, merchants must ensure access to local credit cards. One of the best ways to generate an effective payment infrastructure is to establish local partnerships with payment processing companies. The Olympics provide the perfect opportunity to test the waters.
Alternative payment methods: While credit cards are still the preferred payment method in Brazil, Boleto Bancário – a payment slip issued through the banks – is the main alternative payment method for customers who buy online.
Boleto works like a cash payment that enables online purchasing for customers who don’t have a credit card or are unable to make successful debits. This method is used by the majority of B2B payments in Brazil because it enables companies to avoid costly wire transfer fees.
Oren Levy is the CEO of Zooz