Learn more about installments, an unique method commonly adopted by Brazilians to purchase a wide range of goods and services.
Brazilian shopping habits, just like other countries, have their unique features and as a consequence the payments segment of each country adopts its own systems adapted to the local culture. Unlike most countries where cash payments dominate, in Brazil and in a few other countries in Latin America, installment payments are the choice of consumers and retailers alike, accounting for more than half of all retail sales in Brazil.
Installment payments in Brazil were born a few decades ago and proved to be successful in driving retail consumption during times when inflation was high and unpredictable. Buying products through small monthly payments became crucial at that time to make consumption viable and maintain sales figures up even in unstable economic scenarios.
Through installment purchases, 80 million economically active Brazilians gain purchasing power as they can acquire medium and high-value items, such as cell phones, home appliances and clothing, among others. Installment payments have become so successful locally that they are popular also in the purchase of everyday items and not just higher ticket purchases. When consumers reach the checkout at the store or in an e-commerce platform, they expect to see the options for installment payments, with interest or changes included, thereby ensuring sales during times of low liquidity.
How installment payments work
To show how installment payments work, we will use the example of the purchase of an Iphone XS, which costs around R$ 5,000 in Brazil and can be acquired in up to 12 monthly installments of R$ 415, thereby making it more accessible to Brazilian consumers since monthly installments are affordable.
According to a survey on consumer behavior by the Brazilian Consumer Credit Service (SPC Brasil), 79% of Brazilians usually resort to installment payments. The items most purchased in this manner are apparels (32%) and electronics (28%). According to the same study, the average number of monthly installments is 6.3.
Installment payments are a national preference
Due to this unique purchasing habit of Brazilian consumers, it is important for new players in the market to offer this option when selling their products and services in Brazil if they want a significant market share. Not offering this option will become a major obstacle in converting consumer interest into sales. Installment payments are widely accepted among traditional and online retail channels, and are seen as an alternative always available to millions of Brazilian consumers, thus being able to increase conversion rates by 50%.