Remote purchases made by credit, debit, and prepaid cards grew by 35.6% in the first quarter of 2021 compared to the same period last year, to BRL 120 billion, according to data from Abecs, the Brazilian association that represents the electronic payments industry. The increase was mainly driven by March, the month in which the most digitalized regions of Brazil (South and Southeast) imposed new restrictive measures to contain the second wave of COVID-19 infections, also causing an increase in the number of digital purchases.
More than 97% of these remote transactions were made via credit card (growth of 34.2% compared to 2020), but debit and prepaid card operations are advancing at a much faster pace (121% and 79,3%, respectively). According to Abecs’ president, Pedro Coutinho, this is due not only to the pandemic itself, but to the impetus brought about by the financial emergency aid and the work that the Brazilian payment industry has been doing to include more consumers in e-commerce through debit and prepaid cards.
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In terms of financial volume as a whole, including the physical purchases, the card industry registered a 17.3% growth in 2021’s first quarter, reaching BRL 558.3 billion (BRL 335.9 billion coming from credit card transactions, BRL 204.4 billion from debit, and BRL 18 billion form prepaid cards). This growth, however, needs to be put into perspective, considering that March 2020 was the beginning of the coronavirus pandemic in Brazil, that is, the beginning of the abrupt fall in economic activity. In the case of the payments sector in Brazil, this decline began to be offset in May.
“Looking at the data from April, and also some numbers of partners related to Mother’s Day, we expect a second-quarter as good as the first, and greater growth in the third quarter, with the service sector starting to recover at the end of that period or beginning of the fourth quarter,” Coutinho told reporters.
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He told LABS that the usage of debit cards in e-commerce is likely to continue even after the advance of vaccination and the return to certain normality. “If we take the [financial] aid out of the total account, the 17.5% growth remains robust. The use of debit cards has been increasing a lot due to the digitization effort that all companies and fintechs have made. The work that we have been doing on tokenization technologies, 3DS protocol has been helping to increase the approvals rates of online purchases. And if the approvals rates grow, well, this is a path of no return,” said Coutinho. Abecs data show that debit card transactions have been growing close to 20%, even without the effect of emergency aid.
Regarding the possibility of PIX and WhatsApp Pay cannibalize this debit card growth in the following months, Coutinho said that the payments sector needs to monitor this up close. He said that although it is known that PIX already has high penetration, it would be necessary to have other data at hand, such as the amount of money circulating, to really have the entire picture.
“If the economy grows, as well as people’s digitization, our industry also grows. We will have PIX and WhatsApp growing and boleto, and DOC and TED (the two types of electronic transfers in Brazil) shrinking. With more means of capture, evidently, more people will start to make digital transactions,” said Coutinho.
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It is not yet clear how much one method can replace the other in online shopping, mainly due to the pace of adoption of these new technologies in retail. Currently, PIX is mostly used for P2P transfers and as a payment means for physical day-to-day purchases.
Contactless payments quadrupled
Following the growth tendency signaled in 2020, contactless payments also skyrocketed, hitting BRL 18.6 billion in transactions, a volume 372% higher than that registered between January and March 2020. Credit cards answered for most of this volume, with BRL 11.1 billion, followed by debit cards (BRL 5.1 billion) and prepaid cards (BRL 2.3 billion).
In the first week of January, a new limit for contactless payments came into effect: BRL 200. It was the second time that this limit was increased. In July 2020, it had gone from BRL 50 to BRL 100. According to Coutinho, about 80% of the transactions made in this way, without a password, are today close to this new limit of BRL 200.