Latin America’s digitisation has been rapid, and Brazil is no exception. One of the key reasons for this is the large adoption of PIX, a payment method that grew by just under 850 per cent between November 2020 and March 2021, and has continued to grow since. As we near the end of Q1’22, Unlimint analyses the payment trends in Brazil.
Ádrili Sato, country manager of Unlimint Brazil, a global fintech company with 16 offices all over the world, that offers a large portfolio of financial services – from acquiring to banking and banking as a service. Sato has a background in the financial sector, having been responsible for building up successful banks and financial institutions across the globe. Prior to Unlimint, she was head of finance and treasury at Western Union and senior FP and A manager for Western Europe at GE Capital.
She shared her thoughts on the payment trends in Brazil with The Fintech Times:
As the digital shopping experience grows and consumers become accustomed to buying products online in Brazil, the need for more convenient and secure shopping processes also increases. With such growth and demand, the payment methods available to consumers represent a large part of the shopping experience and continue to need innovation.
PIX enables instant transfers at any time of the day, and has grown exponentially in the last two years as a payment method of choice. The trajectory shows us that it will continue to gain more space in the market and reinvent itself. Today, PIX is already the second most used payment method in the country, with 70 per cent of users preferring this method, only marginally behind cash at 71 per cent, according to a survey by the National Confederation of Store Managers (CNDL) and by the Credit Protection Service (SPC Brazil), in partnership with Sebrae. This year, PIX has begun introducing newer models that are already available to strengthen their services. These include PIX Saque, which allows cash withdrawals in commercial establishments; and PIX Troco, in which the client can receive the funds in physical cash.
The popularity of PIX is so great that the Central Bank is already working on PIX Garantido, which simulates a credit card with further capabilities. PIX Garantido will facilitate making instalment payments and scheduling payments, but it is noteworthy that some banks are getting ahead of the game and are already offering this solution to their customers. Additionally, Central Bank will launch Offline PIX, which will allow the transfer of values without the need for an internet connection. We can also highlight PIX International, to send funds and remittances to other countries, which is expected to be launched this year.
Digital wallets are also a growing trend. Wallets are already known by 80 per cent of Brazilians, and 63 per cent have used this payment method at least once, according to a study by Serasa and Opinion Box. Digital wallets have become favourable to those who want to make a purchase in a secure way, without having to share their data with third parties’. The convenience of digital wallets is enhanced through the practicality of the contactless transaction, which helps to reduce queues at the checkout.
Thanks to the continual evolution of digital wallets, many companies now offer numerous benefits to make the payment method more attractive, such as cashback and being able to have salaries paid in the account. eWallets have also become super-apps, and besides offering payment services with benefits such as cashback, they also offer services such as in-game credit, food delivery apps, doctor appointments, etc. In some capital cities, a visit to the market, for example, is enough to see partnerships with several eWallet brands.
Another is the Buy Now Pay Later (BNPL), which works like a payday loan and is already well known to Brazilians. This solution facilitates instalment payments of purchases in eCommerce that can be made not only through a traditional credit card, but also through fintechs that intermediate between the online store and the consumer. In this case, the company that makes the payment, the fintech, is responsible for the ‘loan’.
Whilst BNPL is a new payment option in the payday loan style, it is worth remembering that some other instalment options will likely gain relevance, such as the PIX Garantido, the boleto in instalments and credit card instalments.
Other solutions such as Pay by Link are already well consolidated and continue to gain adhesion, mainly by including businesses that are not yet present in the digital environment. Thus, enabling merchants to sell with various payment methods without the need for their own eCommerce solution. The link can be shared via messaging applications or through chats on social networks which takes the customer to a checkout page, where they enter their data and make a purchase in a safe and simple way.
It would be impossible not to emphasise the importance of omnicanality as a strong trend in payments in Brazil. Today, many consumers prefer having a mixed experience between physical and digital channels. With the opening of stores and the resumption of retail, the process became based on the ability to connect online stores with the physical store, not only as a shopping channel, but as a catalyst of the journey, a logistics hub, a place to experiment and attract customers.
Today, a customer can choose to buy and pay online, but pick up the product at a store near their home to avoid freight costs and potentially receive the product faster. This type of experience is increasingly becoming the priority of vendors who are already adapting their sales channels, eCommerce platforms, and payment technologies to make this purchase process as simple and frictionless as possible. The conclusion is – retailers need to be more and more where their customers are.
There are many new developments in the payments market this year, and those who want to sell online need to be aware to anticipate these trends and always offer the most relevant solution for their customers. It is worth remembering that all this must be combined with security through anti-fraud tools that ensure reliable transactions and protection of customer data, since this is also a growing concern for consumers and impacts the purchase decision.