As already shown by LABS, PIX, the instant payment system under the leadership of the Brazilian Central Bank, which is due to officially debut in November this year, should ‘steal’ an important part of the payments made today by boleto bancário (the Brazilian popular bank slip) and debit cards, in addition to the deposits and transfers in general. If widely adopted by the Brazilians, this new way of making payments and transfers can also lead acquirers to lose up to 63% of their revenue, or BRL 13 billion if considering the combined revenue of BRL 21.4 billion for the five main players in the national market (Stone, GetNet, PagSeguro, Rede and Cielo) in 2019. This is what the German consultancy Roland Berger estimates.
“In the most conservative scenario, we expect that the most impacted revenues will be those derived from the sale / rental of POS terminals and debit payment commissions (BRL 3.6 billion). In the intermediate scenario, we also expect a fall in revenue from credit payment commissions and prepayment of receivables. In the most aggressive scenario, all revenues are very impacted “, explains the senior director of Roland Berger for the financial industry, João Bragança, to LABS.
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“In our view, this will happen if players entering the payments sector start providing direct credit to the customer, thus replacing the need for credit cards and in-store installment services,” says Bragança. For him, the loss of revenue is inevitable for all players who today are dependent on the payment value chain.
In our view, however, buyers, flags and processors will be the most impacted. To survive, they will have to transform their business model
João Bragança, director for the financial industry Roland berger.
In other words, the current war between acquires in the country can be crushed by the arrival of instant payments. Based on their own data and information from UBS, the consultancy stresses that the increased competition has been putting pressure especially on the two biggest players, Cielo and Rede.
The market share of these two companies fell from 89% in 2014 to 57% last year. Fierce competition has caused rates to fall by about 30%, with greater pressure on those charged on debit card transactions.
Based on markets that are already experiencing the impact of instant payments, the consultancy offers some suggestions on how companies in the sector should prepare for the arrival of PIX. With the new system, the consultancy believes that the most valuable and strategic asset for any company in the sector will be having (checking and payment) accounts integrated with PIX.
“The everyday banking account itself becomes a means of payment and receipt for the economy. Thus, if the acquirers want to survive they will have to develop these offers, with high attractiveness in order to be able to compete with digital banks and other players that offer value reserves (eg retailers; big techs) “, explains Bragança. PagSeguro, Stone and Cielo, for example, have already launched their digital accounts.
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Around this account, acquirers will have to offer a series of products and services, mainly through partnerships with other institutions and companies. According to the expert, it will also be necessary to develop sales intelligence offers for small establishments, since this public, in addition to the individual one, has greater potential for the system.
Digital wallets that already use QR Code as a payment and transfer method take the lead in this regard. On the other hand, they will need to think of new ways to monetize their operations, since the great appeal of these accounts is precisely the zero cost for the most basic transactions.
As already mentioned, the success of the PIX will depend on the adoption of the system by the users, which requires a massive investment in campaigns by companies in the sector. In this regard, Bragança believes that limiting access to the Internet or even smartphones in the country is not an obstacle.
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“The latest data shows that the gap is closing rapidly. Even the smartphone has become the main device for accessing the Internet in recent years. If today we have almost 40 million unbanked Brazilians, the number of people without access to a cell phone is lower. In addition, PIX provides transaction options with a wide range of identification keys (QR Code, static and dynamic, CPF, e-mail, mobile phone number). Citizens would not need to have permanent access to the Internet, “says the expert.
In the Indian market, perhaps the closest example to Brazil among those analyzed by Roland Berger, fintechs and big techs invested heavily in digital wallets, costs, in general, fell, and the volume of payments grew. In Brazil, PIX already has 980 financial institutions in the testing phase, including 32 with more than 500,000 customers each, and intends to charge only BRL 0.01 for every ten transactions, a cost not yet experienced in the Brazilian market.
