When paying for a product or service online, there are several ways and in this article we focus on online payment methods in Brazil, the degree of bankarization in the country, the favorite and most used methods, and which are the mail local payment methods.
According to statistics from an S&P Global study, credit growth should continue to moderate in 2022 due to lower demand for credit of the corporate sector and the lower risk appetite of banks. Weak economic performance will slow credit growth. They expect the retail sector to be the main driver of growth in the credit. Bank profitability should remain resilient in 2022. Also, Brazil expects a profitability to be supported by moderate provisioning needs, a stable net interest margin despite the increase in interest rates and improvements in efficiency. The change in the loan portfolio towards higher-margin loans such as consumer loans and the ability of banks to revalue their portfolios should support returns.
The presidential elections in October 2022 generate uncertainty. It will be difficult to advance fiscal consolidation as elections approach and risks remain related to the pandemic. The Brazilian banking system was recovering from the previous economic crisis before the pandemic hit, therefore various corporations entered the pandemic in fragile conditions.
Financial inclusion has been, and continues to be, one of the great workhorses in Latin America for financial institutions.
In the latest Global Findex survey, it was found that in Brazil more than 70% of the population has had a bank account for more than 15 years and as of October 2020, an investigation by Americas Market Intelligence and Mastercard showed that almost 40 million people had joined a bank in the last 5 months of 2021, at the peak of the pandemic.
Since the beginning of the COVID-19 pandemic, nearly 16 million people have been integrated into the Brazilian financial system, with which 85% of its population has access to financial services. According to data from the World Bank and PWC, 11% of the adult population was forced to open a bank account to receive help from government programs such as Coronavoucher, so we can infer that it was a positive factor in the pandemic.
One of the main reasons for an unbanked population is informal employment, so they are two concepts that go hand in hand due to:
That is why Brazil has 60 million unbanked people, out of 210 million inhabitants, which has opened up possibilities for local firms.
The latest data available about Brazil and credit cards according to World Bank is that it is in 37th place in the world ranking of credit card holders with 27.03%, so 2 out of 10 people had a credit card, even 0.1% below from Venezuela.
The largest Latin American country by size and population, Brazil has the largest eCommerce market in the region, accounting for more than 30% of online sales in Latin America.
A new law is improving financial inclusion in Brazil by making it easier for some of the country’s poorest people to open digital bank accounts. Resolution 4,480 has allowed four of the country’s smallest banks to create financial products for low-income workers, such as accounts that can be opened online or on mobile apps without visiting a bank branch office.
The Central Bank of Brazil has provided great support to the ecosystem, updating its national payment system; Now fintechs and banks are using PIX (National Instant Payment System) as a tool to integrate transactions and improve competitive dynamics in the industry. The next step will allow international transfers.
The largest economies in LATAM compete hand in hand to be the cradle of the main FinTechs in the region. Digital banking, financing of SMEs or systems to assess credit risks based on big data are some of the development focuses that the companies of the new economy have taken to open a space in the competitive world of finance. Some of those companies and local payment methods are:
Official Brazilian payment method regulated by the Central Bank of Brazil. It is a push payment system which was launched in 1993 and today generates 3.7 billion transactions per year.
The payment process for boleto bancário transactions is similar to that of wire transfer or cash payment methods. Customers are provided with a prefilled boleto bancário payment slip. At this point, the customer has the option of printing the form and paying it physically at any bank branch or at authorized processors such as drugstores, supermarkets, lottery agencies and post offices. Additionally, it can also be paid electronically at any of the more than 48,000 ATMs in Brazil, as well as through internet banking or mobile banking apps, which are widely used in the country.
Major domestic debit and credit card brands of Brazil. The scheme supports credit, debit and prepaid transactions, is the third in market share in Brazil following Visa and Mastercard, and has international acceptance over Discover network. The scheme is the most popular choice among locals. Its cards are accepted in 200+ countries. So far, the company has made 120+ million cards. Using these cards, cardholders can shop online and pay in Brazilian currency fast and securely.
Elo was created by the collaboration of 3 different companies: Banco do Brasil, Caixa Economica Federal, and Banco Bradesco. Nowadays, it issues clients credit, debit, prepaid cards. Moreover, it provides additional banking services like payments in installments. The latter allows dividing the payments for online purchases over several months.
Credit card accepted in Brazil, issued by Itaú Bank. It is one of the most popular payment option in Brazil. The company operates throughout the Brazilian territory, notably in the Northeast and South regions of the country where it has a significant share of 3.7% of the credit card market in the country.
After the change in the shareholding control of the Bompreço and Walmart chains in 2019, the card now has a new layout and expanded its scope of action, with two versions: national, under its own brand, and international under the Mastercard brand.
Imagen: Depositphotos
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