Digital payments are growing rapidly in Brazil due to increased smartphone and internet usage. Banks are promoting mobile and online banking while mobile network operators drive mobile money services. Digital payments for customer-to-business transactions present a major opportunity. New technologies like QR codes and near-field communication are enabling new forms of digital payments. Brazil has over 100 million internet users and is a top online retail market in Latin America, yet domestic credit and debit cards dominate online payments over international options.

1. Digital Banks - Brazil
ONCONSULTING STUDY - 2017

2. Background
• Rapid growth of mobile financial services
• Advent of smart phones and wide spread good quality data connectivity
• MNOs driving mobile money services , Banks driving mobile banking and agency banking
• Remittance, Digital Payments and Financial services are the key use cases driving MFS
• Digital payments - Customer 2 Merchants a huge opportunity
• Digital payments opportunity expected to be 7x – 15x of remittance opportunity
• For MNOs who have already launched remittance the next big opportunity to driver
further penetration of mobile money is merchant payments
• For Banks with a wide base of card holders the opportunity is to leverage innovative
technologies like HCE and NFC to drive further usage and improve customer experience.
• Range of new technologies from QR codes, NFC, HCE are driving the new wave of digital
payments

3. Digital Payments – Brazil Scenario
Brazil is the largest economy in Latin
America and the 5th biggest country in
area and population in the world. It is the
4th largest internet market globally with
140 million internet users out of a total
population of more than 207 million.
According to Euromonitor Internacional,
Brazil represents about 42% of all B2C e-
commerce in Latin America. With 111
million active Facebook users, Brazil is
ranked number 3 on a worldwide scale.

4. Digital Payments – Brazil Scenario
Despite the adverse economic scenario of
the past couple of years, Brazil’s e-commerce
market continues showing a positive growth
trend and ended 2016 with a growth of
nearly 8%, with 48 million e-consumers
spending BRL 44,4 billion (US$ 14,3 billion)
on the web.
With a predicted online retail growth of
12% in 2017 and a total of BRL R$ 50 billion
in sales, Brazil continues being one of the
outstanding opportunities for online
retailers in Latin America and the world.
50!

5. Digital Payments – Brazil Scenario
Brazil registered a total of 106 million e-
commerce transactions in 2016, with an
average transaction amount of BRL 417.
Despite leading in number of transactions, the
category Fashion and Accessories is only on the
6th position in terms of revenues with 7%
share. The following are the main product
categories by revenue, with Household
Appliances still leading the list despite a minor
drop of 0.2% in share in comparison to the
previous year
29%
26%
16%
12%
10%
7%
Household appliances
Telephony / Mobile
Electronics
IT
Home and decora9on
Fashion and acessories

6. Digital Payments – Brazil Scenario
Devices
As the 5th smartphone market worldwide, it
is not a surprise to see m-commerce
growing in share in the country. Mobile
devices were used for nearly 22% of e-
commerce purchases, a significant growth in
comparison to 2015, when its share was
only 12%. Desktop is still king and used in
over 78% of the purchases. However, the
rapid m-commerce growth highlights the
importance of making mobile devices a part
of the business strategy for Brazil.
5th
Place

7. Digital Payments – Brazil Scenario
Online Payments
When given the choice, Brazilians use national
payment methods for about 90% of their online
purchases. The country’s online payments market
is restricted by law, dominated by a few local
banks and has its own standards. Domestic
payment solutions are also more cost effective
for consumers, since they save 6.38% IOF tax
applied to international transactions and the cost
of currency conversion.

8. Digital Payments – Brazil Scenario
Domestic Credit Cards
Credit cards issued by local banks are in most
cases limited to national purchases in Brazilian
Real. Credit card payments with installments are
an absolute must in Brazil. Payments by
installments can represent 75% or more of all
credit card payments, depending on the products
sold by an online store.
75%

9. Digital Payments – Brazil Scenario
BOLETO
“Boleto bancário” is the leading push payment
method for businesses as well as consumers. It
enables anyone to pay for online purchases, in
cash at any bank branch, at ATMs or electronically
via online banking. It is a secure payment method
since there is no chargeback risk.
The drawback of boleto bancário is the delayed
payment confirmation which might take up to 3
business days.
3days

10. Digital Payments – Brazil Scenario
100M
active debit cards by
2015
Compared with 86M credit cards
35% are debit of
all cards payment and 50% all
transactions

11. Digital Payments – Key Enablers
Brazilian National Debit Cards
Debit cards are issued by all major banks in Brazil and are therefore very popular and widespread. Debit card
payments represent a stable 35% of all card payments. In terms of number of transactions, debit cards represent 50%
and have recently slightly overtaken credit cards. The importance of debit cards is underlined by the fact that there
are nearly 12.5 million or 13% more active debit cards than credit cards on the market. In Brazil, debit cards are
called cartão de débito and are increasingly replacing other means of payment such as boleto bancário, checks and
cash.
All internet debit card payments require electronic authorization for each transaction. The online buyer is redirected
to a secure authentication page where he must enter a PIN to proceed.
Advantages of Debit Card Payments
Debit cards offer an important growth potential with increased conversions and access to lower income classes with
a smaller credit card penetration. In addition, there is practically no risk of chargeback and debit card payments are
also perceived as secure by the user. Compared to boleto bancário, the immediate payment confirmation is another
advantage.

12. Digital Payments – Brazil Scenario
Digital Wave for Banks
Internet
Banking
Mobile
Banking
Digital
Banking

13. Digital Payments – Brazil Scenario
Digital Banks

14. Fintech Revolution – 1st Wave
Digital Payments – Brazil Scenario
CREDIT CARDS
Digital Credit Cards issue with
low maintance taxes
App to control expenses

15. Fintech Revolution – 1st wave
Digital Payments – Brazil Scenario
CREDIT CARDS
Digital Credit Cards issue with
low maintance taxes
App to control expenses

16. Fintech Revolution – 1st wave
Digital Payments – Brazil Scenario
CREDIT CARDS
Digital Credit Cards issue with
low maintance taxes
App to control expenses

17. Fintech Revolution – 2nd wave
Digital Payments – Brazil Scenario
P2P / P2B
Digital payments between
persons and business. Lower
taxes than common
aggregators as Elo, GetNet

18. Fintech Revolution – 2nd wave
Digital Payments – Brazil Scenario
P2P / P2B
Digital payments between
persons and business. Lower
taxes than common
aggregators as Elo, GetNet

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