Brazil Payments 6 Megatrends for 2021 - A webinar presentation by Americas Market Intelligence - Americas Market ...
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Brazil Payments 6 Megatrends for 2021 A webinar presentation by Americas Market Intelligence May 2021 www.americasmi.com
Legal Notice
Wherever possible, AMI has verified the accuracy of information provided by third parties, but does not under any
circumstances accept responsibility for such inaccuracies should they remain unverified.
It is expected that the Client will use the information provided in this report in conjunction with other information and
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© 2020. All rights reserved. ǀ Private and Confidential www.americasmi.com
Today´s speakers
Marina Gil Gilmar Hansen Lindsay Lehr
VP of Product Payments Practice Managing
Payments Practice Brazilian Affiliate
RecargaPay Director
AMI
AMI
© 2020. All rights reserved. ǀ Private and Confidential www.americasmi.com
Payments industry 25 years
advisory group experience
for companies operating in
AMI is the leading
in the region
Latin America
analytical voice
in Latin America’s
payments industry Executed
300+
Full coverage
of Latin America and the
projects
Caribbean in the payments industry
since 2003
4
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.com
6 Megatrends to watch in 2021
Disappearance of the Instant payments E-commerce Rising dominance of Mass SME digitization Cryptocurrencies
“unbanked” displacing cash seeing massive gains contactless becoming mainstream
© 2020. All rights reserved. ǀ Private and Confidential www.americasmi.com
Trend #1 Disappearance of the unbanked
Social benefits & neobanks greatly reduced the unbanked population
Considering accounts from both banks and fintechs
Penetration of bank and fintech accounts • More than BRL 288
88%
billion dedicated to
82% financial aid during
74%
pandemic
60% 60% 60%
49%
52% • More than 67 million
46% 45%
37%
43%
beneficiaries
• More than 36 million
prior “unbanked”
Brazil Argentina Chile Colombia Mexico Peru
2017 2021
Sources: World Bank, local public sources, AMI analysis and estimates, Caixa Economica Federal
7
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Trend #1: Winners and losers
What is needed to win? Who could lose?
• Most seamless and fastest onboarding process • Institutions focused on their
using facial recognition and digital document products rather than their
uploading customers
• Carefully curated and targeted user journey that • Require any physical step to account
adds value opening
• The most accessible and most helpful customer • Fees and bureaucracy
support
• Capture urban youth
8
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Trend #2 Instant payments displacing cash
Pix shows intensive experimentation by people and businesses
TED volume has remained stable, suggesting Pix is cannibalizing cash and boleto spend, not bank transfers
Registered chaves, millions Registered users, millions Pix volume by transaction type, April 2021
9.6
36%
42%
230.6 Businesses
221
5 P2P
Individuals
B2B
87.3
81.9 Business to Person
12%
10% Person to Business
45% of Brazil’s
banked population
In transactions, PIX is already more used than TED ( 5x more as of
mid Feb/21) but considering volume, TEDs are still much higher (12x
– billions for Pix vs trillion in TEDs)
Sources: Brazilian Central Bank
10
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comPix at the POS? Still a question mark
Merchants take a “wait and see” attitude
What will determine Pix’s usage at the POS?
• Final fees charge to merchants
• Merchants’ promotion of Pix vis-à-vis debit
• Promotion from competing payment methods (i.e. contactless debit)
• Overall user experience
“We don’t expect to incorporate Pix as a payment method right Still to be defined for Pix for purchases
away. People are happy with paying with credit and debit. • Returns and refunds
We’ll continue to watch and see what happens.” • Claims disputes
--Ride-hailing app in Brazil • Reconciliation and integration with merchants’ systems
11
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comWhatsApp vs. Pix
How will the market react having both options?
“We are very excited
about WhatsApp
payments”
-Food delivery app
12
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comTrend #3 E-commerce sees massive gains
E-commerce market volume in 2020
$322
2020(f) Brazil total
e-commerce market
$111 BN
E-commerce market size, USD BN
2020 2024
$111
$97
$38 $35 $37
$34 $28
$13 $12 $8 $4 $8 $2 $11$2
$16 $7 $5 $1 $5 $1 $1.1
$0.2
BR MX CO CH AR PE UY PA DR GT PY
CR
Sources: AMI analysis
14
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comCommerce shifted from the physical to digital,
permanently
E-commerce as a % of total retail
17%
14%
10% 10%
6% 6%
BR LAC
2019 2020 2024
Source: EIU, AMI proprietary research
15
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comShifts in the e-commerce payment methods landscape
Bank
Forecasted CAGR transfers
through 2024
2% 4%
12%
15%
Wallets
Credit
13% Brazil payment Brazil payment
method distribution Debit card card 8% method distribution
57%
5% 2020 5% 2024(f)
65% 38% 67%
Boleto
30% 31%
15%
Credit card Debit card Cash vouchers Wallets Bank transfers
(f) forecasted. Updated AMI analysis available April 2021
Sources: AMI analysis
16
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comTrend #4 Rising dominance of contactless
Contactless makes significant progress in some markets
Pandemic boosted use of contactless/NFC
Estimated contactless penetration of
F2F payment volume, 2020Chile dominates in contactless volumes, followed by Brazil
Estimated 2020 contactless volumes,
BN USD
• COVID massively boosted contactless
$29
card and mobile usage due to fear of
contagion
Est. 25% is NFC
mobile/wearable
$18 • Success of contactless depends on
issuers’ commitment to promotion
• Paves the way for contactless NFC
$4 $4 $3 $3
Chile Brazil Mexico Peru Argentina Colombia
Sources: ABECS, BBVA, Visa, Mastercard, interviews, interviews, AMI analysis
19
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comQR code is being offered more and more often, but make up
Trend #5 Mass SME digitization
SMEs more interested in digitizing than ever. Retail and
fintech giants ushering in SMEs, becoming new acquirers
Opportunities
• Pay links
• Sales over social media and
messaging
• ERP and CRM
• P2M
• Banking for SMEs
• Purchasing platforms
• Lending and insurance
22
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comTrend #6 Cryptocurrencies becoming mainstream
xBorder money flows, 2020, USD BN
LatAm Crypto
inbound
flows
$25 BN Cross-border money flows to Brazil, BN USD
xBorder e-
comm
$25 BN
$9.7
$7.0
$3.4
Brazil
Inbound remittances xborder e-commerce Inbound crypto
Source: World Bank, Chainalysis, AMI research and analysis
24
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comAn estimated 83% of LAC crypto inflows is
“professional,” meaning transaction > USD
10,000 in value
% of crypto volume transferred by use case in LAC
• Professional investors
• Crypto-based hedge funds
83%
• B2B purchases of inventory
17% • P2P money transfers • P2M purchases
Retail P2P Professional
25
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.comCross-border P2P in 2021 Crypto P2P now represents 8% of the traditional market
Crypto-based xBorder P2P, Traditional xBorder P2P Crypto P2P as % of fiat
MM USD MM USD P2P
Mexico $493 $40,508 1%
Colombia $476 $6,491 7%
Peru $204 $2,393 9%
Brazil $1,649 $3,358 49% Underserved
Argentina $527 $496 106% remittance
market and
Venezuela $544 $279 195%
new use
Chile $425 $32 1326% cases
TOTAL $4,300 $54,500 8%
Source: World Bank, Chainalysis, AMI analysis
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26Cross-border P2P in 2021 Crypto P2P now represents 8% of the traditional market
Crypto-based xBorder P2P, Traditional xBorder P2P Crypto P2P as % of fiat
MM USD MM USD P2P
Mexico $493 $40,508 1%
Colombia $476 $6,491 7%
Peru $204 $2,393 9%
Brazil $1,649 $3,358 49% Underserved
Argentina $527 $496 106% remittance
market and
Venezuela $544 $279 195% new use
Chile $425 $32 1326% cases
TOTAL $4,300 $54,500 8%
Source: World Bank, Chainalysis, AMI analysis
© 2021. All rights reserved. ǀ Private and Confidential www.americasmi.com
27Cross-border P2P in 2021 Top crypto exchanges in LAC
Top global exchanges Top local exchanges
Country of 24-hr Trade
Argentina Brazil Chile Colombia Mexico Paraguay Peru Uruguay Venezuela
Origin Volume
Argentina $416K X X X X
Argentina $416K X X X X
Mexico $32.15m X X X
Chile $8.12m X X X X
Paraguay X
Chile $4.15m X X X
Brazil $41.87m X
Argentina X X
Argentina X X X X X
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28Ask us Marina Gil Mgil @americasmi.com Lindsay Lehr llehr@americasmi.com
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