You would be shock to know how innovative Brazilian payment landscape has been throughout the years.
Methods from the past evolved – and now, Brazilians have a diverse – as well as technological payment scenario. In this article you will learn everything you need to know about Brazilian payment culture.
The Evolution of Brazilian Payment Culture
When we think of payments in Brazil, Pix likely comes to mind. However, the country has undergone a long journey to reach its modern instant payment system. Brazil’s payment landscape is now a blend of traditional methods and digital innovations. For decades, Brazilians relied on alternative methods to manage their finances without credit cards. While these systems haven’t disappeared, yet they now coexist with cutting-edge solutions like Pix.
The “Carnê” and Boleto Era
What is a “boleto,” you may ask? And what is a “carnê”? These terms are very familiar to Brazilians. Let’s rewind a few decades—before credit cards became widely available. Back then, Brazilians relied on “carnês”, little booklets that allow costumers to pay in installments. Here we need to point out an important aspect of Brazilian payment culture: the possibility to pay in installments. This practice not only helps merchants expand their clientele but also increases purchasing power for lower-income consumers, enabling them to access goods that would otherwise be beyond their reach.
These carnê booklets allowed consumers to make large purchases, such as home appliances or electronics, and pay them off in manageable monthly installments. The “carnê” system was crucial in the 20th century, giving millions of Brazilians access to goods they couldn’t afford to pay.
Similarly, the “boleto bancário,” a pre-printed payment slip, has long been a cornerstone of Brazil’s economy. Today, boletos are still used for various transactions, especially among underbanked populations. According to data from FEBRABAN (Brazilian Federation of Banks), boletos remain one of the most popular methods for paying expenses like school fees, gym memberships, housing, health plans, financing, and credit card bills. In 2023 alone, 4.2 billion boleto transactions were processed, totaling R$ 5.8 trillion.
Despite the increasing popularity of digital payment solutions, these traditional methods still maintain its presence in Brazilian commerce. However, its use has been gradually declining as faster, more efficient payment systems take hold. As the future brings new features, customers will always prefer convenience. And that is an important lesson when we are talking about innovation in payments.
Installment Payments: A Defining Consumer Habit in Brazil
As said before in this article, key feature of Brazilian consumer behavior is the widespread use of installment payments, or “parcelamento.” Unlike in many other countries, Brazilians commonly split their purchases into multiple payments, often without any interest. This method became deeply ingrained in the culture, allowing consumers to afford high-cost items like electronics, home appliances, and even travel packages.
Why is it important to understand this behavior? Because it directly impacts how Brazilians use their credit cards today. The practice of splitting payments, once common with “carnês“, has transitioned to credit cards and remains deeply ingrained in Brazil’s payment culture. According to Febraban, over 60% of credit card transactions in Brazil are made in installments, highlighting the significance of this payment method. However, with the rise of Pix, reliance on credit cards for installment payments is beginning to shift.
Local Credit Cards
Many credit cards issued in Brazil are limited to domestic use, meaning they can only be used for transactions within the country in Brazilian real. Even for those Brazilians with international cards, high fees and exchange rates often deter their usage abroad. International purchases typically involve additional costs such as foreign transaction fees, ranging from 4% to 7%, along with taxes like the IOF (Imposto sobre Operações Financeiras), which further increases the total expense.
These factors, along with fluctuating exchange rates, add uncertainty and make international purchases less attractive. As a result, many Brazilians seek more cost-effective ways to manage spending abroad, especially when considering the unpredictability and extra costs associated with credit card use in foreign countries.
Pix: Brazil’s favorite payment method
Launched by the Central Bank of Brazil in November 2020, Pix has rapidly transformed the country’s payment landscape. This digital payment system offers instant, secure, and free transfers 24/7, allowing users to make payments with just a QR code or a unique Pix key. By the end of 2023, Pix boasted over 167 million users and facilitated 42 billion transactions, reflecting a 75% growth compared to the previous year. It has quickly surpassed credit and debit card usage, becoming the most popular payment method in Brazil for both e-commerce and in-store transactions.
Businesses have embraced Pix due to its lower transaction fees, making it a game-changer in the payment industry by offering more affordable options for merchants and consumers alike. On September 6, 2024, Pix set a new record, surpassing 227 million transactions in a single day, breaking the previous record of 224.2 million transactions set on July 5.
Pix’s popularity continues to grow, and so does its family: new Pix categories are set to launch soon. Let’s take a glimpse at what the future of Pix holds!
The Pix Evolution
Pix is not standing still. The Central Bank has planned exciting new features that will further enhance its functionality. One of the upcoming features is “Contactless Pix,” which allows users to make payments by simply tapping their smartphone or smartwatch on a payment terminal, much like NFC-enabled credit cards.
Another innovation is “Pix Garantido,” which brings installment payments to Pix. This feature will allow consumers to split their purchases into monthly payments, offering a direct alternative to traditional credit card installment plans. Additionally, “Recurring Pix” is slated for launch in mid-2025, enabling automatic payments for subscriptions, utilities, and other recurring expenses. These advancements signal the growing dominance of Pix and its potential to render credit cards obsolete.
As Pix continues to introduce new features, it is expected to further disrupt the market, offering faster, more secure, and more cost-effective payment solutions. In Brazil, the future of payments is digital, inclusive, and innovative—and Pix is leading the way.
SOURCES:
AGÊNCIA BRASIL
https://agenciabrasil.ebc.com.br/en/economia/noticia/2024-09/pix-breaks-record-and-exceeds-227-million-transactions-one-day
BRAZILIAN REPORT
FEBRABRAN
https://portal.febraban.org.br/noticia/4071/pt-br/
https://portal.febraban.org.br/noticia/4077/pt-br
