At a Glimpse: Brazil’s Payment Market in 2014

A look at what's in store for Brazil's payment market in 2014, including mobile payments, e-commerce, legislation and NFC.

It’s no secret that Brazil’s e-commerce market is a big deal. In 2013, the sector grew 28%, reaching R$28.8 billion (US$12.2 billion) in sales. This year, it is expected to hit R$34.6 (US$14.6 billion). And hand-in-hand with the country’s online retail industry is, of course, the question of payments.

According to Abecs (the Brazilian Association of Credit Card and Service Companies), financial turnover should reach R$846 billion (US$362 billion) in 2014, with 9.1 billion transactions – 16.9% growth from the year before.

How? First, a look at how things have been going up to now.

abecsIn October of 2013, Brazil’s payment industry reached a major milestone with the passage of Law 12.865/2013. The legislation lays out a number of regulations for the sector, minimizing financial market risk, promoting operation stability, formalizing payment institutions and stipulating interoperability. Also last year, a number of electronic and mobile payment solutions continued to pave the way, including Zoop and PagPop, and prepaid account payments were initiated.

As for what’s ahead, Abecs lays out a number of predictions for 2014. Here are some of the highlights:

  • Increased Competition. Not only will competition intensify among the financial sector’s leaders Cielo, Rede and Santander, but new players will get in the mix as well (Elavon and First Data). This will translate to more competition, lower costs and better quality.
  • Sustained Credit Card Growth. Most analysts foresee the credit card payment business sustaining its growth of about 17% (the same as in 2013). However, events like the World Cup and presidential elections could shake things up.  
  • Mobile Payment Consolidation. As technologies improve and security tightens, Brazil’s mobile payment market will gain strength, and more mobile wallets and payment apps can be expected.
  • Still Not Time for NFC. It’s unlikely that 2014 will be the year NFC gains strong footing in Brazil. Security infrastructure remains an obstacle, and competition from Apple’s iBeacon may be an issue as well.
  • Text Messages Working. Payments via SMS and USSD stand to increase, especially through prepaid accounts used to cover recurring bills and small purchases.
  • E-Commerce to Benefit. There are a number of factors working in favor of Brazil’s e-commerce market. 3-D Secure technology will improve authentication processes and reduce fraud, benefiting retailers and consumers alike. As internet penetration rates increase and m-commerce becomes more common, online retail will profit as well.

Brazil’s payment market has come quite a long way, and as technology and security continue to improve, it stands to get even better.