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April 17, 20 - 11:29 am - LABS

POS terminal firms may see their profits drop 50% by 2021 in Brazil

Card machine and smartphone
Photo: Shutterstock

The pandemic and the consequent social distance measures are affecting not only retail chains, but also POS terminal firms, also known as acquirers. A report by the Swiss bank UBS on this market in Brazil predicts that Cielo, Stone and PagSeguro’s profits will fall 36% in 2020 and 26% in 2021, according to a report by Exame. If confirmed, the projection would mean a 52% drop in profits in less than two years.

“The projection is based on the assumption that the isolation will last until the end of April, with the return of consumption in the fourth quarter,” write Mariana Taddeo and Kaio Prato, analysts at UBS.

-3.2%

is the UBS forecast for the volume of payments in Brazil this year. Before the coronavirus crisis, the Swiss bank expected +20.4%.

According to the bank, despite the downturn, competition between companies should decrease in the period of crisis, since shopkeepers are less prone to switching acquirers.

With many POS terminals left idle, an option that has been growing are payment links, through which the transaction are entirely digital. Cielo recorded a 620% increase in the modality, which was small and does not compensate for the drop in physical sales.