Brazil Country Report

Table of Contents

This Verisk Financial Research Country Report delivers commentary on Brazil's retail banking and payments landscapesupportedby historic and forecast data. The report gives detailed insight into the market'skey players, includingcards networks,issuers, acquirers, banks, and PSPs, plus the country'spayments infrastructure,digital and mobile payments developments, demographic and consumer trends, regulatory drivers, credit card profitability, and more.

What you will learn from this report:

• Where issuers and acquirers are finding healthy income streams
• Why cards are emerging as a favourite payment method for the banked population
• How the debit cards space will fare with new caps on interchange
• Why the credit cards business has great potential (for those who understand this market's dynamics)
• What lies in store for the credit cards market as the global schemes contend with domestic challengers

BRAZIL CARDS & PAYMENTS MARKET | KEY FACTS

• Cards have begun to displace cash as the primary payment instrument for Brazilians: in 2017, total card purchase volume overtook the combined value of ATM withdrawals and cheques.
• The country's retail banking network is extensive, with urban areas well served by branches, cash machines and point-of-sale terminals. There is also an extensive network of banking agents.
• Brazil is in the process of developing a new instant payments platform. Once launched, instant payments will be available 24/7, with the service open to banks and non-banks alike.
• The credit card is the preferred choice for Brazilians when paying for an online purchase. During 2018, credit cards accounted for an estimated 61 per cent of the value of e-commerce transactions.
• Brazil's cards market has substantial room for growth. With the country still having a large unbanked population, a mere 60 per cent of adults held a debit card in 2018.
• Just one-third of Brazilian adults have a credit card, although those that do tend to use them frequently. The average cardholder has three cards and made 135 transactions in 2018.
• New debit card interchange caps came into effect in October 2018. The maximum debit card interchange fee is now set at 0.80 per cent of the transaction value, with the average capped at no more than 0.50 per cent.
• This represents a significant reduction, as the weighted average debit card interchange fee stood at approximately 0.82 per cent in early 2018.
• Although high-interest rates discourage the use of cards for borrowing purposes, Brazil remains a highly profitable developing market.
• Elo, the domestic card scheme launched in 2011, has steadily gained market share, particularly in the debit card segment – where it is on course to become the leading network.
• Competition has increased in the merchant acquiring market, which has been historically dominated by Cielo and Rede. However, the pair still acquire over two-thirds of card transactions between them.