Growth of prepaid cards in Brazil remains strong with increased adoption across payment segments – retail, corporate, and government. Brazil’s central bank regulated use of prepaid cards in 2013 and since then there has been a significant rise in the use of prepaid cards by retail and business consumers. Adoption of prepaid card in retail segments such as transportation, gift card, and shopping (especially online) has helped the category consistently gain market share. In other segments such as payrolls, office expenses, gaming cards, and bill payment prepaid cards have recorded steady growth.
According to PayNXT360, the prepaid card market in gross dollar value terms increased at a CAGR of 22.7% during 2014-2018. Over the forecast period of 2019 to 2023, the category is expected to record a CAGR of 16.2%, to reach US$ 54 billion by 2023.
Local as well as international non-bank Fintech companies are entering the market space targeting unbanked population of foreign workers, locals and travelers from various countries.
Also, retailers have moved away from store branded prepaid cards and are opting for co-branded solutions. Burden of heavy expenses for maintaining the process of prepaid cards, fees and other such expenses are behind this move.
Long haul of recession is playing a crucial role in payment industry of Brazil. Issuance of credit cards has slumped due to non-payments and number of debit cards has also reduced as the number of non-banking customers are high. As a result, use of prepaid cards is expected to increase.
Travelers and working people have been driving demand for travel forex prepaid cards.
As most of the Brazilian merchants prefer dealing in BRL (Brazilian currency) it becomes imperative for international prepaid card suppliers to add BRL as the key payment option to their e-commerce. While over 65% use credit cards and 20% use Boleto Bancário, a payment slip issued through the banks for online shopping, the market for prepaid cards has scope for growth in unbanked customer segment.
There are about one and half million immigrants and over 55 million unbanked populations in Brazil. These are the primary target market for local and international prepaid card service providers. Multi-purpose open-loop reloadable prepaid cards have recorded strong growth in recent years. Closed-loop cards are popular for government owned benefit cards and gift cards.
PayPal wants to capitalize on this unbanked population with their upcoming mobile based payment solutions. Agillitas is one of the leading prepaid card providers in Brazil. The company has issued around 3 million prepaid cards till date with load volume of 2 billion transactions.
Ideally the markets will be seen moving towards cashless transaction when paying through cards for smaller transactions becomes common. Brazil stands way behind in adoption of cashless payment trend as of today. Aspirations such as buying products online, withdraw from ATMs and pay bills using cards by unbanked customers will be the driving factor for prepaid cards in Brazil. Fintechs and financial service providers are trying to capture bigger chunk of untouched Brazilian payment market and are trying to make widespread presence of their financial services to Brazilians.
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