With 2020 just beginning, digital solutions become more present in the payment industry. Because of high smartphone usage, mobile proximity payments and e-wallets are the ultimate trends for the upcoming year.
Furthermore, Brazil’s Central Bank resolutions will revolutionize the payment system in the country, providing faster, safer, and low-cost (or no-cost) transactions for all. Not only will this help digital payment usage, but also the development of innovative solutions from fintech companies and banks.
Dive into the 2020 payment trends in Brazil and learn more about this new reality.
Four payment trends in Brazil for 2020
Not only will Brazil’s Central Bank initiatives play a fundamental role in the payment industry, but consumer habits will also help drive an innovative scenario. We detail below the top four payment trends consumers may expect. Check them out!
1. Instant payments
Under development by the Central Bank of Brazil and forecast to launch by November 2020, instant payments will allow immediate transactions, with no restrictions regarding date or time of day. In addition, this will no longer require an intermediate bank, enabling real-time money transfer and lowering the costs of the bank transfer and withdrawal fees. Payers will also be able to complete payments without the recipient’s personal data.
2. Open banking
One of the main concepts of open banking is that the customer’s data belongs only to them. This will allow that, provided explicit authorization, consumers carry out transactions on different platforms, and not only through their banking apps or websites.
The information will be shared via APIs, meaning the user won’t have to type in their account information and password to integrate one app with another. Furthermore, integrated apps will not have access to the information provided. The model is forecast for the second half of 2020.
3. Proximity mobile payments
Proximity payments are showing fast growth in Brazil: eMarketer forecasts 14.7 million proximity mobile payment users by 2020 and 21 million by 2023. Today, 97.6% of internet users between the ages of 16-64 own a smartphone, and 14.5% use this payment method. The country is the only one in Latin America where Samsung Pay, Google Pay and Apple Pay are all present.
This phenomenon is closely linked to age: younger consumers in LATAM are adopting proximity payments the fastest, naming ease of use on-the-go the main reason for adopting this payment option. In addition, users also point out that they consider the benefits: immediate money transfer, instant confirmation and good back-up in case they forget their wallet.
In addition, public transport has shown to be a catalyst for expanding contactless payment usage in Brazil. With cities such as São Paulo and Rio de Janeiro adopting NFC payments and QR codes, users are slowly becoming more familiar with the practice.
4. Digital wallets
Digital wallets still face a few barriers in Brazil due to the population’s payment habits and lack of understanding. According to Google, 32.4% of users are familiar with the concept of e-wallets, but have never used or downloaded an app.
However, Brazilians are slowly showing increasing interest in this financial solution: according to the Sociedade Brasileira de Varejo e Consumo (SBVC), 61% of Brazilians with smartphones from social groups A, B and C use digital wallets. In addition, Google shows that of the 150 million monthly searches in the financial sector, 4 million involve digital wallets – representing a 37% growth in one year.
Traditional payment methods will continue to be relevant
As payments become more digital, many wonder if the traditional methods won’t cease to exist in the near future. But even though cash payments might seem old fashioned, they are still incredibly relevant in Brazil. Today, 52% of digital buyers use the boleto bancário for their online purchases.
There are 45 million unbanked adults in Brazil, and this is due to multiple factors. While initiatives such as instant payments and open banking might help reduce account maintenance costs related to owning a bank account – and ultimately incentivize the adoption of digital financial solutions – cultural aspects are mainly what make cash payments so relevant in the country.
Many Brazilians work informally, thus receiving their payments in cash. In addition, local businesses offer higher discounts for cash and boleto payments, as this lowers costs when compared to credit card installment payments, for instance. Some cash users also find it easier to manage their finances when dealing with “real” money.
However, there are numerous solutions that help drive financial inclusion among the unbanked population, so they too may take part in the new payment trends. Tools such as the boleto bancário, for instance, enable cash payments for digital purchases and allow users to add funds to e-wallets at no cost, even if they do not have a bank account.
At PagBrasil, we have developed digital solutions focused on the unbanked and underbanked population: the Boleto Flash®, a boleto bancário that provides payment confirmation in less than an hour, and PEC Flash®, a solution that allows e-shoppers to pay for their purchases in cash at any of the over 13,000 lottery agencies in Brazil. We are dedicated to enhancing this solution in 2020 so more Brazilians may have access to digital shopping experiences.