Brazil—A Very Attractive Payments Market

by Tristan Hugo-Webb 0

Brazil will be in the world’s eye soon as thecountry prepares to host two of the world’s premier athleticevents, the 2014 FIFA World Cup and the 2016 Rio Games (the XXXISummer Olympics, in August 2016). The press and public will bepaying attention to the athletic competition, unaware of theBrazilian payments system, but stakeholders in the paymentsindustry should be paying attention to the Brazilian paymentsmarket, which has emerged as a leading player not only in the LatinAmerican region but around the world.

Of the many factors that make the Brazil attractive as a paymentsmarket, the country’s size and the existing payment infrastructureare most important. Although the country cannot match thepopulation of either India or China, at just over 200 millionpeople, Brazil still ranks as the sixth largest country in theworld. This population is likely to increase sharply in the nearfuture since more than 40% of the population is currently under theage of 24.

Although still technically a developing country, Brazildemonstrates some of the common attributes associated with moremature payments markets, including high use of electronic paymentinstruments. For example, between 2008 and 2012, card-basedtransactions in Brazil grew at a compound annual growth rate, orCAGR, of 12.47% with debit and credit cards contributing the mostto the aforementioned growth. Prepaid cards likely hold thegreatest potential to impact the market in the long run, given thatupwards of 50% of Brazilians are paid in cash by their employersand only 56% of the population over the age of 15 in 2011 maintainsan account at a formal financial institution, according to theWorld Bank.

Payment cards are not the only exciting segment in the Brazilianpayments market. Brazil is held as one of the most promising mobilepayment markets, given mobile phone penetration there, consumerinterest, and other factors. According to the GSMA, a globalassociation of mobile operators and related companies, Brazil’smore than 260 million mobile connections make it the fourth largestmobile market in the world.

The country’s market openness to competition (from both domesticand international players) as well as its relatively well-developedfinancial infrastructure make Brazil arguably the most attractivedeveloping payments market in the world, given the difficulties ofoperating in China and lesser market development of India andRussia. Brazilian authorities actively regulate the paymentsmarket, as do authorities in Europe and elsewhere in the world. Asa result, there is little doubt that the Brazilian payments marketwill be ready for the limelight the country is expected to receivein the coming years due to the 2014 FIFA World Cup and the 2016 RioOlympics.

For more information on the Brazilian payments market, including onits payment card, ATM, banking, mobile payment, and e-commercesegments, see the recently released Mercator Advisory GroupResearch Report titled, The Brazilian Payments Market: Ready forthe Limelight.

Follow Tristan on Twitter @THugoWebb.