Brazil is among the countries with the highest banking rate in the region, equivalent to 96% of the population aged 15 and over, according to analysis by Americas Market Intelligence (AMI). It is also welcoming the adoption of e-commerce, which now has an 88% penetration rate among the adult population, according to AMI.
This is opening up a range of possibilities in the field; in fact, AMI has identified at least three niches in the payment industry (neobanks) with a strong position in Brazil: digital banks, led by players like C6Bank and Nubank; retailers, including MagazinePay (by Magazine Luiza) and BanQi (by Casas Bahia); and, of course, fintechs, notably N26, PagBank, and Mercado Pago.
Nubank, incidentally, is a major competitor within the ecosystem, with 62 million users in Brazil as of September 2022. AMI analysis and Nubank’s third quarter 2022 report show that 36% of Brazil’s adult population over the age of 15 already has a Nu account. PicPay and Mercado Pago are close behind, with 55 million and 22 million users, respectively.
For Sulivan Rocha, a Brazil-based AMI analyst, the four characteristics that define the success of neo-banks are:
- Issuance of credit and debit cards
- Ease of doing P2P transactions
- Top-ups and charges in cash through Boleto and Pix
- Possibility of investment from within the app
Despite these features, each player is looking to make its mark in the ecosystem. PicPay, for example, is the standout player with respect to cashback, a value proposal that has attracted many of its current users. Another example is C6Bank, which has captivated the market with a robust points scheme called “Átomos,” and the option of international accounts for high-income clients. Bradesco’s digital solution, Next, is another case in point. Targeted toward a young audience, it has an app that stands out for its ease of use and user experience.
Major trends in e-commerce
The AMI payments team concurs that this neobanking wave stems from the massive success of Pix. AMI has analyzed Pix’s growth in terms of P2B transactions, i.e., acceptance of payments by Pix in commercial establishments. The team found that this type of transaction now accounts for 10% of the total volume of transactions through Pix (August 2022 data).
Pix is opening the way to P2B, with massive growth in transaction volume between 2021 and 2022. Because of this, we can expect new policies from the central bank to stimulate this aspect of Pix in the near future.
Beyond Pix, financial service providers are expanding and transforming into marketplaces (remember that 88% of the adult population buys online in Brazil, according to AMI). Nubank offers a selection of stores directly from its app, with options for discounts, cashbacks, and the possibility of payment by installments with Pix Parcelado, provided that the purchase is made from Nu’s app. Another case is Banco Inter, which recently launched its Inter Shop solution, a marketplace in alliance with Brazil’s biggest stores.
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