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The real digitization of payments is just starting in Brazil, but 2023 will definitely be a very important year for the country.
“Far from what has been said, electronic and digital payments methods will not be competing but complementing each other by finding their own niches,” explains Leonardo Escobar, Head of Latin America at ACI Worldwide.
“This will definitely be the major trend in payments for 2023, boosted, among other things, by the expansion of ecommerce,” Escobar says. According to NielsenIQ Ebit, ecommerce in 2021 grew 27% compared to the previous year.
The pandemic has radically changed the way people consume, expanding the user experience with digital payments, and has forced retailers to incorporate more electronic channels. In fact, since mid-2021, the number of Brazilians purchasing via digital channels, like mobile apps, have grown from 37% to 48%, according to data from Panorama Mobile, and in Brazil, many new players, such as Nubank, Picpay and Mercado Pago, have emerged or consolidated their position. Known around the world by its innovative character, according to Escobar, the Brazilian payments industry will be led in 2023 by five key trends:
1. Money has gone digital
In the first half of 2022, purchases with credit, debit and prepaid cards grew 36.5%, totaling BRL 1.6 trillion, according to the Associação Brasileira das Empresas de Cartões de Crédito e Serviços (Abecs). The data shows that card payments continue to grow at a rhythm above 30%, driven by greater digitalization of transactions and the return to normality after the pandemic.
Credit card use increased 42.2% and, for the first time, reached R$ 1 trillion in payments within a six-month period. Debit cards where second in volume, with a rise of 16.6% to reach R$ 488 billion. Prepaid cards totaled R$ 99.4 billion, growing 137.7%.
In all, there were 18.7 billion transactions in the first half of the year, representing a growth of 37.4% compared to the same period in 2021.
2. PIX will continue to expand
Second, PIX is also growing fast, as its “keys” totaled almost 551 million in 2022 among the 141 million Brazilian PIX users, according to the latest data from Brazil’s Central Bank (BCB). The number of transactions reached 24 billion last year, surpassing credit, debit and pre-paid combined.
“PIX is a success and a worldwide reference for driving financial inclusion and providing an easy and flexible user experience. Also, as incredible as it may seem, and contrary to what many think, it also stands out for its security by preventing people from withdrawing and circulating with great amounts of cash,” explains Escobar.
With the positive acceptance of the population and the market, the BCB is already studying new formats for the instant payment system, such as PIX Garantido. It’s already possible to see banks and fintechs providing installments on PIX rails on their own. According to Escobar, this should gain supporters fast, as the technology allows purchases to be made in installments and without a credit card. At the same time, the seller is guaranteed to receive the amount, as the financial institution acts as an intermediary.
3. Digital wallets also have a good perspective
It is worth mentioning that the use of digital wallets in Brazil increased significantly in 2022. According to a study from Bank of America with data from Sensor Tower, banks and digital wallets had a record 20.768 million downloads in July, a 14% growth compared to the previous year.
Statistics from the Brazilian Society of Retail and Consumption (SBVC) show that 61% of Brazilians with cell phones have digital wallets. Practicality and instant confirmation are the main features preferred by consumers.
4. Crypto regulation and CBDC
Concurrently, every year, digital currencies reach new people in Brazil. According to data from Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais (Anbima), at least 4.2 million people currently invest in cryptocurrencies in the country, and this trend is expected to grow, especially supported by the regulation scheduled for 2023. House of Representatives bill 4401/2021 (recently approved, text must now be sanctioned by the president) guarantees more security against crypto crimes and protects investors. For Escobar, the planned regulation can also boost projects such as the Brazilian digital currency, Real Digital (CBDC) and other modalities that could help to strengthen the industry.
5. Tighter digital security and fraud management
Finally, as payment methods and channels continue to grow and evolve, so do fraud attempts. Escobar believes that there will be a strong push toward improvements and prevention in 2023, with a particular focus by financial institutions on artificial intelligence, machine learning and incremental learning to identify risks and ensure that real digitalization in Brazil is safe for users.