Brazil remains a cash-driven economy, with cash accounting for 77% of total transaction volume in 2018.

With government and bank initiatives, and growing consumer awareness and confidence in digital payments, Brazilians are gradually shifting towards electronic payment methods.

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The government has taken steps to increase financial inclusion and promote electronic payments, including expanding the rural banking infrastructure, appointing banking correspondents, and introducing regulation to allow consumers to open bank accounts through digital channels.

With the necessary infrastructure in place – including a wide ATM network and the highest proportion of POS terminals among its regional peers – consumers are gradually becoming more aware of the benefits of payment cards. The frequency of card payments rose from 23.2 times per card per year in 2014 to 33.4 in 2018.

Over the next five years, developments in e-commerce and contactless technology will help drive growth in the card market. Debit card penetration is high in Brazil, with the average Brazilian holding at least one debit card. This is supported by growth in the country’s banked population, with the government and banks striving to provide access to financial services nationwide.

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In an effort to increase financial inclusion, the government passed Resolution 4,480 in April 2016, requiring banks to allow consumers to open checking, time and savings deposit accounts using electronic channels. The law removed the need for physical IDs or proof of address, easing the account opening process. Banco Inter was one of the first four banks to introduce the measure; its account numbers rose from 10,000 in March 2016 to 80,000 in December 2016. The debit card payments transaction volume is also rising, recording a significant CAGR of 12.3% between 2014 and 2018.

The cap on debit card interchange fees in October 2018 will encourage debit card transactions in the coming years. Despite low penetration, pay-later cards are the preferred type, accounting for 60.3% of the total card payments value in 2018. Pay-later payment frequency stood at 46 times per card per year in 2018, in comparison to 27 for debit cards.

Banks offer reward programmes and cashback to encourage card use. Growth is also supported by the availability of instalment facilities for big-ticket credit card purchases. A decrease in credit card interest rates charged by leading banks will also aid growth in this space. The e-commerce market grew from BRL39.5bn ($11.92bn) in 2014 to $19.23bn in 2018. Improvements in technology and online and mobile penetration have enhanced consumer confidence in online transactions.