Digital Wallets | Carteiras Digitais
Digital Wallets | Carteiras Digitais

Digital wallet usage grows in Brazil

Earlier this month, we mentioned in this article that digital wallets will be one of the main payment trends in Brazil for 2020. Now, a study carried out by Bain & Company recently showed that digital wallets should reach 28% of the total payments made in points of sale in 2022.

Today, 61% of Brazilians with smartphones from social groups A, B and C already use this technology, as shown by the Sociedade Brasileira de Varejo e Consumo (SBVC). In addition, Brazil is the only country in Latin America where Samsung Pay, Google Pay, and Apple Pay are all present.  For 47% of consumers in Brazil, ease of use on-the-go is the main benefit that encourages them to make a mobile payment. For 53%, immediate transactions and instant confirmation account as the main benefit.

 

What are digital wallets?

Digital wallets – or eWallets – are apps that allow users to make mobile payments both online and in points of sale. Users may add funds to their accounts and also register their credit and debit cards.

When purchasing in presence, users simply approximate their devices – such as smartphones or wearables – to the POS machine and proceed with payment, thanks to the NFC (Near Field Communication) technology. It is also possible to complete payment by scanning a QR Code. This way, users don’t necessarily need to carry their wallets with them all the time, since the payment methods are available digitally.

In Brazil, digital wallets are increasing financial inclusion, as it allows users to add funds by simply paying a boleto bancário. In other words, there is no need for users to have a bank account in order to benefit from the use of eWallets. With 45 million unbanked adults and over 90 million smartphone users, digital wallets will enable more consumers to participate in the digital payments phenomenon.

 

Digital wallets in Brazilian ecommerce

According to Bain & Company, digital wallets’ participation in ecommerce will go from 36% in 2018 to 47% in 2022. While credit cards and boleto bancário are still the preferred payment methods for e-shoppers, eWallets offer a positive and frictionless mobile experience.

In addition, exclusive benefits offered by these apps, such as cashback and discounts, also increase user adoption in the ecommerce market. A study conducted by Méliuz, one of the leading coupons and cashback apps in Brazil, showed this feature accounts for 54.7% of consumer interest for buying during Black Friday. Lower prices were the top reason, with 80% of customer interest.

 

Digital wallets, instant payments, and open banking

Other elements that will account for the growth of digital wallets usage are the regulations in place by Brazil’s Central Bank. Instant payments and open banking will play fundamental rolls in this scenario.

Instant payments will allow immediate transactions, with no restrictions regarding date or time of day, enabling resources to be transferred from one account to another 24/7. In addition, payers will be able to complete transactions only with the recipient’s phone number or e-mail address, without the need of being provided the name and CPF number.

With open banking, on the other hand, consumers will be able to 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.

These two resolutions combined will also enhance the payment market in Brazil. Users will be able to make immediate transactions between different apps, and not only among users from the same app.

 

What will drive digital wallet usage even further in Brazil

Even with high cash usage, digital wallets are likely to grow because of the population’s familiarity with smartphones. According to research carried out by Mobile Time and Opinion Box, 85% of internet users with smartphones in Brazil have used their devices to buy physical goods through an app, and 17% said they have already experienced mobile proximity payments. In addition, simplified payment options such as 1-click purchase and biometric authentication are one of the most important m-commerce functionalities for 37% of users.

Service apps are one of the main features that help encourage this phenomenon. Not only do Brazilian shop for physical goods with their smartphones, but they are also heavy users of urban mobility apps, food delivery apps and digital financial services – all important drivers to the increase of digital wallet adoption.

Urban mobility

Urban mobility plays an important role in the increase of digital wallet usage – and in more than one way. For one, with the adoption of NFC and QR Code payments in public transportation – as mentioned in this article –, smartphone users become more familiar with this technology. In addition, research shows that, in one year, the proportion of Brazilians who requested a ride in car service apps went from 66% to 75%.

As a result, car services apps are starting to find ways to include more users and enhance their payment experience. Uber, for instance, has recently launched in Brazil Uber Cash: a digital wallet that offers pre-paid payment options for all of the services offered by the company. Cabify is also looking into similar solutions and has announced in July 2019 their plans to enter the fintech market in the country, enabling drivers to receive their payments through the app and pay for their bills.

Food delivery apps

Food delivery apps are also entering the fintech market in Brazil: 62% of users have ordered food using their smartphones. The leading food delivery app iFood, who recently enabled QR Code payment in point of sales, is one of the players to account for this scenario.

Banks

At first, one might think fintech companies are taking over the place of traditional banks; however, major banks in Brazil are also participating in the digital revolution. Not only are they enabling new features to their apps, but they are also launching new solutions. Itaú, one of the largest banks in Brazil, recently launched iti, a digital wallet available for everyone – and not only those who already have a bank account at Itaú. Further, financial service apps are present in at least 5% of smartphone users’ home screen, according to Mobile Time and Opinion Box.

Digital services are likely to be one of the main drivers to the increase of eWallets in Brazil, as they are already very present in Brazilians daily lives. In addition, enabling pre-paid payment methods will also encourage digital wallet adoption, as it allows people with limited access to banking services to be included in the financial system and easily pay for their purchases – both online and in points of sale.

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