Cross-border BNPL in Brazil, with Vinícius Vieira
The Fifa World Cup is the biggest prize in football. So, about ten years ago now, the world's best men's team headed to Brazil with glory on their minds, but it wouldn't be easy: home to loud and loyal fans of the sport's most storied national team, winning in Brazil would take a monumental effort. In fact, many thought it would be impossible. Global lenders know the feeling. Home to half of the people in South America, the Brazilian market is oh so tempting, but oh so hard to break into. But not impossible. Like Germany ten years ago, if you play it right, you can win.
In today's episode, I'm speaking to Vinícius de Andrade Vieira, Head of Business Development at BEXS - connecting Brazil to the world through a digital platform with payment and exchange solutions. We chat about fintech and BNPL in Brazil, the growing global trade, and how international companies can crack the market.
Bexs is over at: https://www.bexs.com.br/
Vinicisu is on LinkedIn at: https://www.linkedin.com/in/viniciusdeandradevieira/
And I' writing this from the airport, having lost track of the day in the pre-holiday chaos 😳 You can also find and follow me on LinkedIn (or connect) at: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=brendanlegrange
Otherwise, my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24
If you have any feedback or questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.
Regards, Brendan
The full written transcript, with timestamps, is below:
Vinicius Vieira 0:00
Each time where I think that this cross border space between Brazil and the world has reached its maximum I'm wrong: every year it just keeps growing steadily and steadily and steadily.
79% of Brazilian consumers typically would divide their purchases into instalments. So this is a reality has been a reality. Now, we are also integrated with NuPay, which offers the user the capability to make a purchase with an offshore motion, and have the interest rate defined by no bank itself in the checkout process.
What we're focused on is to make the financial products available for merchants that don't have a local entity and a local structure in Brazil, so that they can great for the consumer base the same experience that our local ecommerce player can provide.
Brendan Le Grange 0:59
Brazil is home to the largest economy in South America and has been since the 1960s. But though most of the decades since then have been characterised by globalisation, the Brazilian economy remained, according to the Council on Foreign Relations, one of the most closed in the world.
But that's changing and quickly, trade as a percentage of GDP had bounced between 20% and 30% for the last two decades, but when for 29% in 2019, to 32% to 38% to 39% last year. And that brings some new challenges for financial services, who are unused to lending to customers whose incomes and expenditures cross international borders.
It may be more famous for its football and beaches and carnival but today, we're in Brazil to learn about BBNPL, and an increasingly important understanding of forex flows. Welcome to How to Lend Money to Strangers with Brendan le Grange.
Vinicius Vieira, Head of Business Development at BEXS, welcome to the show.
Vinicius Vieira 2:18
Thank you, and nice ot meet you Brendan, it's a pleasure to be joining you.
Brendan Le Grange 2:21
And Vinicius you're no stranger to the world of payments and digital commerce, so before we get into the work you're doing now with BEXS would you mind talking a little bit about your early career?
Vinicius Vieira 2:33
So I've been working with cross border payments from Latin America with the world since 2012. Project building for businesses worldwide, were able to crack the Latin American market and extract the maximum payment conversion, they could with regards to the local consumers,
Brendan Le Grange 2:54
And now you're at BEXS, which is all about connecting Brazil to the world via exchange and payment technologies. And as we'll hear later credit tools as well. So I visited bexs.com.br And I see you've got a few aspects to the business. Would you mind giving us a quick overview of the bank's group and its history kind of how it fits together? And if there's not making it too complicated for a single question, maybe just a little bit of context of how it fits into the Brazilian financial landscape.
Vinicius Vieira 3:24
BEXS, it's a regulated Foreign Exchange Bank.
It exists as a company since 1989, so it's been it's been around for quite a long time, permeating the market as a regulated bank since 2010. As a financial institution, BEXS started digitising cross border consumption, which has started with Brazillian consumers accessing worldwide products or Chinese ecommerce overall, but also worldwide merchants offering goods to Brazilian consumers.
And then in well true revolutionary path of tackling other forms of cross border enablement, from b2c to b2b, to investments to remittances. And also in 2018, we've created our own payment company called backpay, providing the best fit payment products to Brazilian consumers while they are accessing worldwide merchants, such as payment with instalment, buy now pay later and local payment options.
Brendan Le Grange 4:34
Lovely and finishes. When I was preparing for this, I see that actually half of the people in South America live in Brazil. So it is a market that attracts a lot of interest from international companies. And recently revolute the British FinTech has launched a business in Brazil. So clearly that interest from outside players still exists. That's
Vinicius Vieira 4:53
Correct. So we've been helping inspiring international companies to accessible All right, good coconuts like levels for instance, which has recently launched an operation with us, and also other global PSP such as NUPay Euro support.
Brendan Le Grange 5:11
Also, just if I think about the headlines, at least the ones that make it to the English speaking world is all about Neo banks, and in particular new bank, the now 10 year old Neo bank with 50 million customers already. So, from the inside, what has it been like to experience that change throughout your career and that uptake of fintech?
Vinicius Vieira 5:31
So we're talking about a coach with with 212 million people in which 80% of the population is ally that has 27% ecommerce growth year over year, and that has 60% cross border ecommerce growth since 2021. It is a huge market. Indeed those numbers they show that, but at the same time, how did they have a localised experience while accessing goods worldwide, which is something that they are willing to do the numbers show that there was a big demand in Brazil for Financial Inclusion.
This created a big opportunity for these new banks. Since the pandemic, the bank colorization level in Brazil went to 165 million people to 188 million people. And that was mainly provoked by this new digital banks that presented themselves to the market. So digital accounts relieves most credit in account creation processes.
For example, Social baits to offer financial products and in give credit for those consumers. Brazil also created interoperability system called peaks three years ago, which enables peer to peer transfers with no costs in real time. This interoperability system connects all of those digital banks with the traditional Beijing allowing financial interaction to take place when it's both when a low cost. So it democratises a little bit the access of consumption. When you have a set of digital banks, including this consumption base into the financial ecosystem and given them capabilities to consume goods while have a big demand for cross border consumption. It enables our business to organically grow.
Together with this trading realities of more people accessing the financial ecosystem having more access to financial products called our mission is indeed giving access for political Schumer's to worldwide goods and services and allow them to interact financially while accessing investment portfolio of short, relating funds globally are available b2b side to have like a small and medium businesses conducting the foreign exchange transactions with the best efficiency that a digital process can allow.
Brendan Le Grange 7:58
I earlier mentioned new bank, not just because they're in the headlines, and they the name that everybody knows, but because there's a little product called New pay, which we should probably talk a little bit about
Vinicius Vieira 8:09
the concept of giving credit for purchase is pretty old in Brazil. So it has started in the 50s. It was a way for the market to increase the buying power of consumers. While credit was really hard to access, consumers also struggled a lot with inflation rates beat inflation rates. So this was a mechanism that the market specially retail created for allowing an individual to purchase something with a fixed price, but with the capability of divided payment over several instalments so that the purchase amount would fit into his monthly budget.
Then when credit card brands started exploring deep deeply the the Brazilian market, they started offering this so the issue is together with the local acquires in Brazil, they started offering as well, the capability of consumers to purchase or to start paying those instalments directly on their credit card bill month over month and we came into a place in which 79% of music consumers typically would divide their purchasing to instalment so this is a reality has been a reality.
Now, with this ever growing transition from physical retail to online retail, what has happened is that those processes that were mostly close to traded on the acquiring market, which was either on retail or online offering instalment based purchases for the consumer base also started being provided by digital banks or direct wallet checkout processes such as no pain.
And Nubank, it's a phenomenon. It has 70 million consumers in Brazil and they have launched last year abroad called the NuPay in 3, which allows users to make a purchase and divide the transaction instalments.
But out of the critical system, so no bank grieves a credit line for those consumers directly considering the credit score that they have on their accounts, so that the user can divide a purchase instalments director the checkout process regardless of the status that he has in the credit card ecosystem. So it's one more additional credit layer provided to the users. And it has a lot more similarity with the concept of biophilia that exists in North America.
And in Europe, we've been offering this product of Nupay since June 2022.
Brendan Le Grange 10:42
I'm originally from South Africa, and I started my career with credit cards there. And traditionally, this is 20 years ago, and from long before then, as well, we used to have a product called budget. And essentially your credit card limit was split into half of it was for normal day to day transactions, and half of it at the point of purchase, you could say put it over three months, six months, 12 months. And that instalment in store concept, as you said, it's been there for a long time, the key difference was that you used to pay that off at credit card interest rates. So you're paying very, very high costs for that instalment, but people still appreciated it because you could do your day to day spending. And then that one big item you bought every now and again, you could pay down in manageable chunks.
And convenient, yes, but now we're seeing this new wave of BNPL that can take you out of the car ecosystem. And I guess in doing so gives you so much more competition for price.
Vinicius Vieira 11:37
I have a critical system. I don't think there's anything wrong with a critical system. It's pretty well done. It's interoperable. It's a special place for a long time. But my perception is that one of the benefits of removing the credit offering from the credit system is that credit offered by the CarDekho system on instalment based purchase has like two dimensions of risks.
So the credit risk itself and the transactional risk chargebacks that can be acquired or card transactions, that impact pricing, credit cost, right? What do you mean, the transaction for the card credit card system, my vision is that you still have of course credit risk, but that's managed directly from the institution that holds the account holder so it has more accuracy to identify that it price that more accurate in a remove the transactional risk of credit because on a wallet base authenticated transaction, you don't have that bagel over chargebacks.
Brendan Le Grange 12:34
Let's stay on this point for a moment and explore what banks and they be in parallel solutions are, I guess, what are you doing then how you pulling these bits together? Because you're making these products and services available rather than underwriting the credit yourself. That's true. So
Vinicius Vieira 12:51
what we do is that we give the capability of a final version. So we'll give you BNPL instalment based transactions offered to the client base with bridge the necessity of the consumer that there really is of the global motion to sell more and convert more sales in Brazil. correctly, we do offer direct connectivity for worldwide merchants with local acquiring. So they are capable to offer credit card based instalment transactions, but we are also integrated with no pay, which offers them the capability of the user to consume and to make a purchase with an offshore motion and have the interest rate defined by no bank itself. In the checkout process. Ben is already authenticated in what
Brendan Le Grange 13:40
Yeah, and I want to just pick up on that global merchant side because that's not something I fully understood the complexity of you mentioned Chinese manufacturers and retailers, we've seen these websites that used to be for manufacturers and wholesalers and such become more direct to consumer. So you've got these places you can go on and order products and have them shipped or dropship. And imagining you you you're working with this sort of website or even just brands that we know from abroad and connecting them to Brazilian consumers. Am I getting that right? Yeah,
Vinicius Vieira 14:12
basically, were not playing in the market place the local marketplace by offering local payment options for local consumers Kaushalya local ecommerce. Instead of doing that, what we're focused on is to make the financial products available for merchants that don't have a local HTML code structure in Brazil, so that they can great for the consumer base the same experience that our local e commerce player can provide.
Brendan Le Grange 14:41
Opening up a whole new world of commerce to be able to use the tools they know for bank accounts, they know the payment tools they know and access anybody no matter where they are in the world in a seamless way. But yeah, fascinating part of the market to serve.
Vinicius Vieira 14:56
Indeed, as I said before, I believe Z industry started in 12. And back then another payment provider, offering resume consumers to keep the ability to access goods on specific Chinese marketplaces. They struggle from those Chinese marketplaces, they saw a lot of traffic on our website coming from Brazil, and a lot of transactional attempts, the brilliant open conversions. So there, we're actually losing 70% of that potential customer base. What we started doing with Beck's was actually localised the payment experience for consumers so that they could dodge the frustration of not being able to accomplish the purchase they were trained to do, so that they could actually capture the whole potentiality of the market. It is amazing how this has continuously been growing since then, each time that I think that this cross border space between Brazil and the world has reached its maximum maturity, emerald keeps growing every year, growing steadily and steadily, steadily. It's amazing.
Brendan Le Grange 16:08
The word the frustration, I think is a key one because as a consumer, it just feels like it should be possible quite easily. And a lot of the business fits in this idea of growing choices and growing options where you can connect anywhere in the world. So almost infinite number of merchants, different products, different payment tools, and you're bringing them into one place. So if I'm a consumer, and I go to the website of a Chinese manufacturer, and I want to buy some products, I'm a Brazilian consumer, what does that experience look like? How do I interact with bakes do I even know it's you
Vinicius Vieira 16:40
depends fully white label transparent, so their x API server to server so fully transparent for the consumer base, either on the generation of the BEXS QR code for pain, or either a credit card transaction. And AR can also be branded with our checkouts can also be branded with our picks QR code layout, as well. So it depends a little bit on the configuration that the merchant wants to give. For the end consumer. Some of them prefer to have a fully transparent process. So they don't lose engagement with the consumer based on the brand level, some of them would rather have our grain shone on checkout, so that the users are identifying who is actually company located in Brazil that they can access in case they have any issues with their payment process, as we also do customer care for those consumers on behalf of those worldwide merchants.
So we are, in Brazil, the direct point of contact for the consumer. So it depends a little bit of the strategy of the motion, but we had both options enable
Brendan Le Grange 17:51
that sort of trust that it adds by having a name that you know, and a local team, you can you can get a hold of I mean, all situations, it's good to have a trusted brand. But it's exponentially more important when you're doing a cross border deal, particularly if this is your first time.
So I should imagine that local presence is a huge driver of conversion, getting people to try for the first time, let me make my first order. Yeah, really great example of putting these bits of the bank's group strength together to make credit available for these sort of purchases that are just becoming so standard in our day to day lives.
And Vinicius it's been a great pleasure hearing this from you and getting my head around what that actually means. You know, Brazil is a market that, while I don't know very well, is very intriguing. And I think many people listening have an eye on Brazil. And their question was how do we crack the market? So if anyone is listening here that wants to learn more? Where can they go to find out about Bix, where can they follow the big story online,
Vinicius Vieira 18:52
we'd be pretty active on media. So you should type out Beck's on Google and a couple of recent articles or that's the industry that we've been co creating, such as this one. Also, a lot of information. It's available in our websites, our portfolio of clients or solutions.
Even our API's are public.
And myself share my LinkedIn profiles Well, announcement of this of this podcast and super responsive on social media. So any companies, merchants and partners willing to accessible to the market and have questions or want to discuss anything particularly about the market to listen to trends just strictly out of messager.
Brendan Le Grange 19:36
For anybody who's a football fan, your name should be very memorable with pernicious envy arrows actually. He made that easy for me. Easy to find, but I will put those links in there and Beck's is b x s.com.br. If you want to jump straight to the website, but yeah, as I said, it's been a pleasure talking to you learning a bit more about the Brazilian market but before I let you go, where are you putting your energies? Where are you, Derek? at your time at the moment as bakes firstly
Vinicius Vieira 20:01
a lot of energy. But all our existing initiatives, which is other convention in the industry and also providing effects infrastructure for digital will facilitate that we're doing large scale players like revolute and obeying and so far, but we are looking a lot towards b2b. As an industry, we have paid a lot of potential will be to see cross border flows so far. And now I think the challenge is that we're trying to take ownership on and try to bring solutions to the market is how do I bring a lot of efficiency on b2b trading as well. Everything that we offer in terms of may not be Vader and divided purchases, instalments for Metro purses that are accessing global nations worldwide. We offer as well for visitor corporations accessing goods and services such as software, for instance, worldwide, where we are also trying to be relative efficiency in the payment and effects operation as well. So we spent a lot of time so 11 years, heavily focused on b2c Now, we're also trying to bring the same efficiency to b2b space. I think there's a big opportunity there.
Brendan Le Grange 21:15
Yeah, well, good luck for that. I think that it is such a pain, historically, the sort of conversion of money and the payments and the admin that goes without that if we can find ways to make that efficient, it really does change what it means to be a business and open up the world. And I love that vision of connecting Brazil to the world coming across in multiple different ways. So yes, thank you again for your time saying do it in education, but also very interesting for me to hear about the big story.
And thank you all for listening.
Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there.
This show is written and recorded by myself Brendan le Grange in Brighton, England and edited by Fina Charleson of FC Productions.
Show music is by Iam_wake, and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show and I'll see you again next Thursday.