The online payment market - Brazil

1.1 Definition and scope of study

E-commerce is driven by the expansion of world supply and the increase in the number of commerce as well as technological development. Faced with this increase in online shopping, there are more and more players in online payments and innovation is key to gaining market share. One of the key factors for success in this market is the security of payments in order to gain the confidence of traders on the one hand and consumers on the other.

European and international competition is intense with players like Paypal and Amazon Pay that are well established. In addition, VISA offers a new rechargeable smart card system that allows online payment of blocked amounts. Giants like Google and Apple also offer online payment solutions (Google Pay and Apple Pay), while fintechs, sometimes supported by big banks, offer alternative solutions.

With a recent history of subsequent economic crises, Brazilians still feel reluctant to make large spending, even though credit cards are the most widely used means of payment in the country, representing 30% of digital retail. Still, with more than 123 million orders per year, the e-commerce market continues to expand by leaps and bounds.

The current growth in smartphone penetration in Brazil establishes a favorable scenario for innovation in online payments. Almost 50% of orders placed in Brazilian e-commerce are made by mobile devices, which has also fuelled the proliferation of digital wallets, both online and at the point of sale (POS). However much progress has been made, digital wallets still account for only 10% of payments in Brazil, while in the rest of the world the average is of 37%. With increased use of digital wallets, retailers should offer an attractive shopping experience by optimizing their websites or applications, providing a more personalized and faster experience.

Besides major international players, the Brazilian market also has successful national startups, such as EBANX, one of the Brazilian unicorns that processes payments from platforms such as Netflix, Spotify and Airbnb. New and old players must be aware of new regularizations in the sector, such as the implementation of Open Banking in Brazil in 2020, which should revolutionize the payments and financial services market in the coming years.