Over the years, people in Brazil have become increasingly interested in purchasing goods and services online. As mentioned in our last article, e-commerce sales have increased by more than 100% over the past five years. The current pandemic has fueled this trend, and according to several market studies, Brazilians are likely to maintain their recently adopted virtual habits even when the crisis ends.

An important aspect to mention in this context: Brazilians are increasingly processing online purchases via mobile phones. 85% of consumers with smartphones have already used them at least once for online shopping, according to a 2019 market report. For comparison: in 2015, only 41% of smartphone owners also used them for e-commerce.

Undoubtedly, this has a significant impact on mobile payments. While the vast majority in Brazil still use credit cards to pay online, the use of digital wallets, in particular, is increasing. According to J.P. Morgan, sales by this method already represent more than 27% of e-commerce transactions. In its analysis, the American bank comments that “Brazil’s enthusiastic adoption of digital wallets indicates that this payment method may rival the use of cards as the primary form of online payment by 2021.”

Instant Payments Expected to Boost Mobile Payment Transactions

The term mobile or digital wallet refers to a virtual wallet that can store credit card payment information, as well as gift cards, coupons, loyalty cards, and other mobile payment information. Digital wallets are apps that allow mobile payments online and also at point-of-sale locations.

According to British investment consultancy Buyshares, Brazil is already the fourth-largest global market for mobile wallets. By the end of this year, transactions with them are expected to increase to over $22 billion.

Especially with the implementation of instant payments, market experts believe that mobile payments will soon expand in popularity. Instant payments, or so-called proximity payments, are used in stores when consumers bring their mobile phones or other wearable devices close to a specific machine near the checkout counter, using Near Field Communication (NFC payments) or a QR code to proceed with the payment.

“Ease of Use” is the Strongest Argument for Mobile Payments

Regarding NFC payments in particular, the main global providers are currently Samsung Pay, Google Pay, and Apple Pay. All of them are already present in Brazil – which is a strong indicator of the future potential of the mobile payments market in the country. Thus, research firm eMarketer predicts an exponential increase in instant payment users. According to eMarketer data, Brazil currently has around 12 million instant payment users. Their expectation for Brazil is to reach 21 million users by 2023.

Market research indicates that especially younger consumers are likely to adopt new mobile payment methods. They primarily value ease of use, the ability to transfer money immediately, and receive instant confirmation. In a study, respondents specifically answered what encourages them to choose mobile payments. Nearly 40% responded that it would be a good backup in case they were without their physical wallet.

What Are the Main Challenges for Digital Payments in Brazil

While it is a booming market, mobile payment providers still face various issues, such as user security and regulatory compliance. For example, when WhatsApp recently attempted to launch its mobile payment service in Brazil, they had to suspend it just one week after the official launch in June 2020.

According to the TechCrunch platform, the Brazilian central bank intervened, arguing it was necessary “to preserve an adequate competitive environment in the mobile payments space and ensure the operation of a payment system that is interchangeable, fast, secure, transparent, open, and affordable.”

TechCrunch reported speaking to a WhatsApp spokesperson who said they want to continue enabling mobile payments together with local partners and the Central Bank. “We support the Central Bank’s PIX project in digital payments, and together with our partners, we are committed to working with the Central Bank to integrate our systems when PIX is available,” the spokesperson added.

PIX is the mobile payment service of the Central Bank of Brazil. It is likely to be available in November of this year.

These Brazilian Startups Offer Mobile Payment Solutions

Other Brazilian companies are also investing in the promising technology. A national report mapped 112 payment startups in the country, 22 of which are exclusively focused on mobile payments. According to the Brazilian innovation platform Distrito, some of the most prominent apps include PicPay, Code Money, and Celcoin.

PicPay

The app allows people to transfer money to each other and pay for products in stores and bills. To start making mobile payments, the user needs to register a credit card or transfer an amount via bank slip.

Code Money

This app functions as a digital wallet, where the user loads the desired amount. It allows consumers to shop at partner stores and works like a debit card. Users can transfer amounts from phone to phone in up to three seconds.

Celcoin

Celcoin is an app that turns any smartphone into a terminal for bill payments, mobile top-ups, bus tickets, TV plans, and even managing credit points for Uber and Netflix. Freelancers, shopkeepers, micro-entrepreneurs, and retailers have primarily started offering the platform’s services to their customers to become more competitive.