2021 was a challenging year for the Brazilian economy, but what can we expect in 2022? Due to the rise in agricultural production, and a drop in the fuel price, inflation is set to decrease. From an international standpoint, the Federal Reserve in the US predicts interest rates to rise in 2022, which will affect the economy worldwide.
Despite the scenario of uncertainty, not only in Brazil but for most countries in the world, due to the ripple effects of COVID-19’s economic impact, the question is: is it still worth investing in Brazil? The short answer is yes. But for a complete explanation, let’s look at the most significant events and trends this year and their importance to the country.
Brazil is globally known for its unique style of soccer and its national passion for the sport. When it’s a year of a World Cup, the demand in specific markets increases – many products related to the championship, such as TVs, smartphones, games, and sportswear, rise dramatically in demand during this time. That means, regardless of the economic forecast scenario, Brazilians will find their way (as they always do!) to appreciate their passion for soccer.
Read more: 2022 Top Trends in the FinTech Industry
In addition, e-commerce will continue to grow in the new year. Shoppers have migrated from physical stores to online shops and are continuing to do so. Worldpay from FIS has estimated that e-commerce in Brazil is set to increase 56% by 2024.
Pix in 2022
Pix celebrated its first anniversary in November and has reached over 100 million users. The technology developed by the Central Bank of Brazil quickly became one of Brazilians’ favorite payment methods and has become the world’s fastest-adopted instant payment system.
According to the Central Bank of Brazil, because of its tremendous success, there’s more to come in 2022. Things like automatic charges, automatic recurring payments, and contactless payments are some of the features predicted to be embedded in Pix.
For digital businesses operating in the country, it means broadening payment methods offered to their customer and boosting sales revenue, as Brazilians choose Pix as one of their preferred real-time payment methods.
Read more: Pix 2022: What to Expect from Brazil’s Newest Payment Method
Brazilian and international FinTechs on the rise
According to the International Compensation Bank, 50.5% of FinTech businesses out of the whole of Latin America are concentrated in Brazil. In 2021, US$500 million was invested in FinTech in the country, and Brazil received 68% of all funding in LatAm. Also, Brazil ranks as the fifth-largest internet and mobile device penetration globally.
The startup movement in Brazil has gained international attention. In the past, the country earned a reputation for its excessive bureaucracy and high taxation, but things have changed, and now it offers excellent potential for local and foreign businesses.
The largest unicorns in LatAm are also here: Nubank, C6 Bank, Nuvemshop, Wildlife Studios, and Loft, just to name a few.
However, some difficulties are still highlighted for digital businesses aiming to find ground in the fertile Brazilian territory, such as cultural differences, language barriers, and alternative payment methods.
So, before rushing to translate your website into Portuguese or trying to understand how the Brazilian market operates, it’s crucial to team up with a local and highly qualified partner in Brazil.
PagBrasil is a leading PSP in the country, and has been on the market for 20+ years. During this time, it has supported numerous cross-border merchants to expand their business in Brazil, offering alternative payment methods such as Boleto Flash®, Débito Flash™, PagBrasil Pix, and many others.
Read more: PagBrasil in a 2021 Retrospective
The growth of new niches
The consumer’s behavior has changed since the beginning of the pandemic. People have become more confident to shop online and the market has adapted and opened to new opportunities.
Niches that have significantly increased in the last couple of years are wellness and health, pet care, e-learning, gaming, CBD, and SaaS, among others.
For instance, the gaming market in Brazil is expected to grow approximately 5.3% in 2022, set to reach US$1.84 billion. The industry is enormous: more than 70% of Brazilians play games online, and it is predicted to grow more than music and video streaming.
The same goes for the e-learning niche. Brazilians are choosing to get educated from the comfort of their homes, which will make the industry exponentially rise 18% from 2021 to 2025.
The newest niche to gain traction in Brazil is CBD. The use of cannabis in medicine is rising in demand from the consumer side and gaining supporters in the medical world. However, planting marijuana is illegal in Brazil, so producers must import the raw material and patients need medical prescriptions to get their medicine. Merchants working in the CBD production chain have an opportunity to expand their businesses and enter the Brazilian market.
After learning about all the possibilities that Brazil offers to cross-border merchants, if you wish to invest and expand in the country, we’d recommend you partner up with a local PSP. PagBrasil supports all modalities of local payment and offers exclusive and innovative methods of payment that have the highest conversion rates on the market.
If you wish to know more about our services, click here or get in touch with our sales team.