Mercator Blog

Brazil—A Very Attractive Payments Market
Date: February 25, 2014
Research Team
Brazil will be in the world’s eye soon as the country prepares to host two of the world’s premier athletic events, the 2014 FIFA World Cup and the 2016 Rio Games (the XXXI Summer Olympics, in August 2016). The press and public will be paying attention to the athletic competition, unaware of the Brazilian payments system, but stakeholders in the payments industry should be paying attention to the Brazilian payments market, which has emerged as a leading player not only in the Latin American region but around the world.

Of the many factors that make the Brazil attractive as a payments market, the country’s size and the existing payment infrastructure are most important. Although the country cannot match the population of either India or China, at just over 200 million people, Brazil still ranks as the sixth largest country in the world. This population is likely to increase sharply in the near future since more than 40% of the population is currently under the age of 24.

Although still technically a developing country, Brazil demonstrates some of the common attributes associated with more mature payments markets, including high use of electronic payment instruments. For example, between 2008 and 2012, card-based transactions in Brazil grew at a compound annual growth rate, or CAGR, of 12.47% with debit and credit cards contributing the most to the aforementioned growth. Prepaid cards likely hold the greatest potential to impact the market in the long run, given that upwards of 50% of Brazilians are paid in cash by their employers and only 56% of the population over the age of 15 in 2011 maintains an account at a formal financial institution, according to the World Bank.

Payment cards are not the only exciting segment in the Brazilian payments market. Brazil is held as one of the most promising mobile payment markets, given mobile phone penetration there, consumer interest, and other factors. According to the GSMA, a global association of mobile operators and related companies, Brazil’s more than 260 million mobile connections make it the fourth largest mobile market in the world.

The country’s market openness to competition (from both domestic and international players) as well as its relatively well-developed financial infrastructure make Brazil arguably the most attractive developing payments market in the world, given the difficulties of operating in China and lesser market development of India and Russia. Brazilian authorities actively regulate the payments market, as do authorities in Europe and elsewhere in the world. As a result, there is little doubt that the Brazilian payments market will be ready for the limelight the country is expected to receive in the coming years due to the 2014 FIFA World Cup and the 2016 Rio Olympics.

For more information on the Brazilian payments market, including on its payment card, ATM, banking, mobile payment, and e-commerce segments, see the recently released Mercator Advisory Group Research Report titled, The Brazilian Payments Market: Ready for the Limelight.

Follow Tristan on Twitter @THugoWebb.