Business

Not even the resumption of the travel and services sectors changed the pace of digitalization of purchases in Brazil

The volume of transactions with credit, debit, and prepaid cards, both in person and remotely, grew 36% in Brazil in the first quarter of 2022 compared to the same period last year, reaching BRL 758.6 billion. For the first time, 9 billion transactions were registered in a quarter (an average of 100 million operations per day). That’s what a new report from Abecs, an association that represents the card and electronic payments industry in the country, shows.

This growth reflects the pandemic under control even in the face of the new Ômicron variant and a low base of comparison since in the first quarter of 2021; consumer mobility was limited by the peak in the number of cases and hospitalizations of COVID-19. The fast pace of digitalization of transactions and online purchases, as well as the resumption of travel and the service sectors, were the factors that most boosted results, according to Abecs’ president, Rogério Panca.

Once again, the volume of payments made through prepaid cards more than doubled, reflecting the increasing penetration of neobanks and digital wallets (BRL 44.6 billion were transacted through prepaid cards in Brazil between January and March).

On the other hand, credit and debit cards continue to account for most of the pie, with BRL 478.5 billion (42.4% increase over the first quarter of 2021) and BRL 235.4 billion (up 15 .2%) traded in the period, respectively.

READ ALSO: B3 enters the trillion-dollar card receivables party in Brazil; announces fintech Marvin as its first customer

The resumption of face-to-face activities did not affect the growth of remote purchases

Brazilian spending abroad more than doubled in January and February compared to the same period last year due to the resumption of international travel, data from the Central Bank show. The volume transacted in February, of BRL 2.17 billion, was very close to that pre-pandemic – in February 2020, BRL 2.5 billion were moved. Spending by foreigners in Brazil also grew (54.5%), reaching US$ 665 million.

The pace of non-face-to-face purchases in e-commerce has not slowed down, despite the reopening of several activities due to the cooling of the pandemic. The so-called non-face-to-face transactions moved BRL 162.4 billion from January to March this year, up 35.2% over the same period last year.

In-person contactless purchases grew 455.9% over the first three months of 2022, reaching BRL 103.2 billion (meaning that this transaction represents 30% of the face-to-face volume of payments). Last year, contactless transactions accounted for at least one in four face-to-face dealings.

READ ALSO: A new chapter in the battleground between incumbents and fintechs in Brazil: prepaid card interchange fees

“Transactions up to BRL 200 have an excellent experience, as there is no need for authentication. We are on track with the projection of having 50% of transactions taking place via NFC technology by the end of 2022,” stressed Panca.

The credit card continues to be the type of card most used in this function (BRL 58.1 billion in contactless transactions), followed by the debit card (BRL 28.4 billion) and prepaid card (BRL 16.7 billion).

The level of delinquency still below previous years (2.7%), and the fact that 75% of the credit granted through cards does not bear any interest rate highlights, in the entity’s assessment, the force of the device as an instrument of financial inclusion and fuel for the growth of sectors such as e-commerce — despite the industry’s greater caution in issuing cards to new customers. “We noticed many issuers working within their own base, focusing on behavioral data that provide more security. Even so, there are good opportunities in the open sea [industry jargon for offering services outside their existing client portfolio]. The rising interest rate also increases funding costs, which is also another factor of caution,” noted Panca.

READ ALSO: PIX is ‘much cheaper’ for merchants than credit and debit cards, economists from BIS and Brazil’s Central Bank point out

“For now, also due to the monetary tightening, we continue to estimate that the Brazilian card industry will reach BRL 3.2 trillion in transaction volume in 2022 [a 21% growth over 2021, slightly lower than the previous year],” said Panca.

Last year, credit granted via card operations became Brazil’s third-largest consumer credit modality, behind only personal loans and real estate financing: BRL 391.8 billion were moved by the sector in 2021, more than twice as much as ten years ago.

The growth in the use of debit cards in online purchases (still far from its potential), as well as the continuous internalization of access to cards and the exploration of the possibilities of creating products combined with cryptocurrencies, are some of the focuses of Abecs to, perhaps, take this growth beyond expectations.

Panca said the entity has no data on the impact of PIX (Brazil‘s instant payments system) on the card industry. In March, an article published by the Bank for International Settlements (BIS), co-authored by Brazil‘s Central Bank economists, showed that PIX is “much cheaper” for shopkeepers than cards. According to the article, PIX would have an average cost of 0.22% per transaction for Brazilian merchants, while debit cards cost just over 1% and credit cards 2.2%.

This post was last modified on May 10, 2022 12:20 pm

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Fabiane Ziolla Menezes

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