A new credit card company in Brazil is set to enter the local
cut-throat market.
Shopcards begins its operations in mid-April and expects to
acquire two million clients in a year.
Go deeper with GlobalData
Shopcards will offer re-payments of up to 200 instalments – this
would be equal to about 16 years or more.
The company, however, said that it will be up to individual
merchants to decide whether they want to allow 200 instalments, or
whether they want to offer fewer instalments.
The payment in instalments is very common in Brazil, but
generally in a maximum of five instalments.
Although the use of credit cards in the country is increasing in
popularity, there are still many areas in Brazil.
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By GlobalDataShopcards said that there is also a lack card payment
opportunities at certain businesses, such as at dentists.
Without a credit card, most instalment payments are paid with
the use of a specific paper instrument in which each page refers to
one instalment. This is usually referred to as a boleto.
According to the Brazilian Bank Federation about two billion
paper boletos were issued every year in Brazil until 2009 and it is
still a very common way of payment in Brazil.
Marcello Gimenez, Shopcards vice president, said certain
consumer segments will be able to pay for their shopping in
instalments without interest, just like they already do with other
credit cards in the country.
For long term instalments, Shopcards promises that interest
rates will be lower than the ones offered by other credit card
schemes.
“It will stay between 2.5% and 3.5%,” Gimenez told local website
UOL.
Banks charge an average interest of 3.81% a month, or 56.63% year,
according to the National Association Finance, Management and
Accounting Executives.
According to Brazil-based economist and specialist in finance,
Samy Dana, credit cards are not always the best choice of credit in
the country, UOL reported.
Dana emphasised that Brazilian consumers should check other
credit options.
“The interest rate charged by Shopcards might be lowers than the
other credit cards, but it is still higher than other credit
models,” says Dana.
He cited the loan Banco do Brasil offers for the purchase of
cars as an example. This type of credit has a monthly interest rate
that starts at 0.99%, and the bank also supports a nationwide
credit scheme, known as CDC (Consumer Direct Credit), which is used
to finance furniture and domestic appliances purchase, with average
interest rates of 1.97%.
