SaaS Conversion Rate: Brazilian Market Analysis

With the global SaaS market projected to reach $908.21 billion by 2030, it's safe to say that the competition level will go straight through the roof. And since there are 30,000 SaaS companies worldwide, this certainly gives credibility to the whole idea. 

The United States, with its massive 17,000 players in the market, is a valid example of the intense competition that exists. But for ambitious entrepreneurs seeking new opportunities within the Latin America landscape, Brazil shines just as bright as the North Star. 

While it displays an impressive growth rate, its SaaS landscape remains relatively uncrowded, offering a chance to stand out through increased sales and capture market share.

But to take advantage of this opportunity, you need to be prepared in terms of payment systems and infrastructure to allow you to keep your conversion rates at an all-time high. After all, what are online payments if not proof of profitability? 

From payment processing to access to the most popular payment methods and complete tax and compliance management, the Merchant of Record.
In this article, we plan on looking at the Brazilian SaaS landscape and discussing how merchants can make the most of its revenue potential. We’ll be exploring:

Brazil SaaS Market Overview 
5 Ways To Boost Conversion Rates In Brazil 
Is The Merchant of Record a Solution? 
How Can PayPro Global Help?

Brazil SaaS Market Overview

Looking to expand to new territories? Eyeing Brazilian consumers? Well, no surprise there. 

After all, Brazil is the world’s fifth-largest country and the ninth-largest economy. 

But there is more to this market that draws SaaS entrepreneurs to it in such large numbers, and we will find out exactly what triggers so much interest. 

Before we dive into this market overview, let’s understand exactly why this is even relevant in the first place. 

Brazil has a population of 217 million, and while this can be interpreted as a massive audience of potential customers worth tapping into, it also means there are many payment preferences amongst this amount of people. 

In Brazil, more so than in other global markets, customizing your payment options can significantly help boost conversion rates. By adequately satisfying the payment needs and preferences of your audience, Brazil has the potential to reward your efforts more generously than other regions, meaning your online purchase will grow at an impressive speed.

Local Currency and Exchange Rates 

Today, we look at the Brazilian market and see a thriving tech landscape, a true magnet attracting VC investors, but it wasn’t always like this. 

Up until 1994, when the Brazilian Real (BRL)  was “crowned” as the country’s new currency, Brazil struggled through different reforms to obtain a strong and stable economy which is now thriving. The Brazilian Real went through different phases, but since 1999, it has been floated to the USD.

One thing you may not know about local currencies is their fixed or floating nature. A fixed currency has static exchange rates assigned by the government, whereas a floating one changes and is set by the Forex market, with the purpose of stimulating economic growth. 

But it’s relevant to point out that in many cases, they use an alternative currency exchange rate called the tourism exchange rate. Foreign businesses can easily be tricked by this and lose money - it even has a separate symbol.

Payment Method Analysis

Customers around the world have different payment preferences. Everyone knows that. 

But given its large population, Brazil is an example where offering alternative payments makes a remarkable difference. Localizing payments for your Brazilian customer base can lead to a significant increase in the conversion rate. For instance, SaaS businesses that offered Bolleto or credit card installments as alternative payment methods noticed a 90% higher conversion rate. 

In terms of payment methods, here is a short rundown of the top options in Brazil: 

Subscription Vs. One-Time Payments 

With 88% of consumers saying they’d commit to a recurring service, we are noticing the rise of the subscription business model in the Brazilian market as opposed to one-time payments.

In the context of more and more subscribers feeling overwhelmed by the large number of services they’ve subscribed to, especially during the pandemic period, the fact that Brazil is now embracing this model comes as a huge opportunity for SaaS merchants. 

Brazilians are now spending an average of R$225 monthly on recurring services, with digital leading the pack.

Subscription Vs. One-Time Payments 

With 88% of consumers saying they’d commit to a recurring service, we are noticing the rise of the subscription business model in the Brazilian market as opposed to one-time payments.

In the context of more and more subscribers feeling overwhelmed by the large number of services they’ve subscribed to, especially during the pandemic period, the fact that Brazil is now embracing this model comes as a huge opportunity for SaaS merchants. 

Brazilians are now spending an average of R$225 monthly on recurring services, with digital leading the pack.

Market Highlights

Since the Brazilian market is filled with opportunities for SaaS businesses, including it in your growth plans is, by all means, a wise strategic step. 

5 Ways To Boost Conversion Rates In Brazil

So, your first goal is to sell in Brazil. Check. But you also need to make sure that you are selling a notable amount in order to recover your investment and increase business profitability. 

So why not focus on achieving both goals from the very beginning? 

How? By setting up a robust patent infrastructure that ensures increased conversion rates for all your transactions within the Brazilian market. 

Here are five best practices you need to consider when preparing for the road to success. 

Localize your transactions 

As we’ve mentioned earlier, Brazil stands out as a real growth opportunity due to its large customer base. But this is a double-edged sword because the greater your audience is, the more diversified their payment preferences are. 

Still, if you cater to these preferences as best as possible, you’ll be able to boost your sales. 

Responding to payment preferences means you must provide shoppers with as many options in local methods so they complete their purchases. 

Credit cards, Pix, Boleto Bancário, Débito online, and online bank transfers are some of the top options you should consider. These will help you increase trust and reduce friction in shopping experiences. With mobile payment growing in popularity and the population’s easy access to the Internet, it’s important to be able to offer consumers this payment alternative as well. 

Additionally, providing shoppers the option to pay in their own currency is a great strategic move. Through automatic currency conversion, you can display your price in the Brazilian Real (BRL), making it simple for the customer to understand whether or not they are getting a good deal or feel the price is fair. 

However, it’s important to pay attention to your provider’s exchange rate so you don’t get tricked by the tourism rate. 

To make a long story short, localizing transactions enables your SaaS business to communicate with potential consumers in the most important language there is: payments. 

Reduce your SaaS payment failures

One of the most obvious ways to boost transactions is to reduce SaaS failed payments.

A strong combination of robust cascading systems and smart payment routing, alongside card validation and pre-dunning communications, will ensure that your SaaS business has the right infrastructure set in place to allow you to keep the sales you’ve won. 

And let’s not forget about the importance of offering multilingual customer support, a tool that comes in handy in successfully handling any disputes.

Unfortunately, there is one problem with this plan. Without a strategic partner like the Merchant of Record that has the necessary systems, tools, and payment networks in place, you may not succeed. 

Consider language localization 

If a customer prefers to pay in their own currency, using local payment methods, it’s safe to say that they’d also prefer to have an overview of their order in their own language. 

Translating your website content, especially on the checkout page, can lead to a huge increase in sales in Brazil. 60% of Brazilian consumers said they would purchase more if the brand in question would speak their language.  And that’s saying something. 

However, when it comes to this particular region, you need to be particularly careful regarding the language you decide to use. 

Your goal is to use Brazilian Portuguese and not literary Portuguese. Even though Brazilians speak English, you shouldn't get your hopes up as far as this form of communication is concerned because only 5% of the population will be able to understand you.

Be compliant with local rules and regulations

Seling in Brazil requires SaaS businesses to comply with a diverse set of tax and regulatory compliance rules and regulations.

You might think this seems simple to handle, but in reality, you’ll likely find your team buried in paperwork sooner than you think. 

There are specific taxes that you need to collect and file to the Brazilian authorities, and they are sometimes collected automatically by the provider, not always though, and it can become very tricky if you use multiple providers.

Brazil’s regulatory landscape is notoriously complex and constantly changing, making it difficult to remain compliant on your own. And, of course, this exposes you to a range of risks like fines, penalties, business disruptions, and even potential legal consequences. 

On the plus side, establishing a strategic partnership with a robust Merchant of Record is an easy solution for this challenge. By connecting your SaaS business to a business model that offers complete tax and regulatory compliance, you’ll be removing the guesswork and operational complexities.

Consider a hybrid revenue model 

Currently, Brazil is perceived as an emerging opportunity for subscription businesses, so capitalizing on this trend is a wise tactical move for your business. 

Still, one-time payments implemented as an additional pricing option offer an extra revenue channel, so why ignore it? 

Managing a hybrid business model that answers the demands of multiple customer segments can only help your SaaS grow, especially if you couple the revenue model with a flexible pricing strategy, free trials, and regional pricing to personalize campaigns based on different seasonal celebrations and cultural events in Brazil. 

Is The Merchant of Record a Solution?

The Merchant of Record is a comprehensive payment solution that facilitates global growth and considerably simplifies connected operations, leaving SaaS merchants with more time on their hands to focus on what matters: perfecting their product. 

Given this short intro, we can say that a partnership with an MOR solution is a smart step in ensuring a successful entry into the Brazilian market, without adding a substantial amount of pressure and workload on your team.

How Can PayPro Global Help? 

With over 15 years in the payments industry, PayPro Global is the Merchant of Record of choice for thousands of ambitious businesses. 

Equipped with extensive experience, specialized knowledge, and cutting-edge technology, we empower entrepreneurs to effectively market their SaaS, software, and digital products across diverse global markets. Wherever you want to take your business, our MOR unique model can facilitate your business growth. 

By combining key payment methods and local currencies with smart routing and AI-powered cascading systems, PayPro Global excels in every market, achieving strong authorization rates and increasing cross-border SaaS transactions.

As a certified PCI-DSS Level One partner, we are committed to achieving global compliance, upholding the most rigorous payment information security standards, and ensuring that payments are not declined due to compliance issues.

Additionally, through complete tax management, localized content, and retention tools, we help you lower your involuntary churn rates and boost consumer trust and satisfaction. 

Find out more about our all-in-one payment solution and how we can help strategically scale your SaaS business anywhere in the world, including the highly-rewarding Brazilian market.