Brazil is Latin America's largest digital commerce market, with a transactional volume of USD 276.9 billion in 20231. It will likely grow by 51% over the next couple of years, reaching USD 500 billion in 2026. Brazilians' growing digitisation and innovative payment industry support such growth.
For decades, we have heard that cash is king in Latin America, but this may soon no longer be true in Brazil. Over the last decade, the country has evolved from being majorly unbanked to becoming one of the leading financial innovation hubs in the world. According to Central Bank data, cash withdrawals decreased by around 27% in 2023.
Alongside India’s UPI, Brazil’s instant payment system, Pix, stands out as the world's real-time payments (RTP) disruptor. It has managed to digitise millions of transactions that were paid in cash before and create the basis for new solutions that can be built on top of it.
For the industry, expanding the customer’s digital footprint translates into leveraging data to offer a broader range of products and services, facilitating the monetisation of increasingly larger and more qualified datasets.
Pix already accounts for 45% of all payments in the country and a third of all ecommerce purchases. It is also on its way to surpassing credit card transactional volume. Launched in late 2020 by the Central Bank, which centralises the system's operation, Pix was rapidly and widely adopted by the population. It is currently used by more than 70% of adults and nearly 15 million businesses, moving 20% of the country’s total transactional volume.
While governments have a crucial role in opening financial systems through innovative regulations, many experts say fintechs are better tuned in to the needs and desires of newly banked citizens than larger traditional institutions. Nearly a quarter of all global fintech platforms operate in Latin America, and Brazil concentrates most of the leading companies in the region, with Nubank – one of the world's biggest neobanks and Brazil's fourth largest financial institution with over 105 million customers – as their leading example.
The combination of regulatory push and innovative fintechs positioned Brazil as a global benchmark in financial regulation.
Despite Brazil's RTP success, when it comes to in-person transactions cash is still among the top methods. The Central Bank hopes to gradually change that as the system gains new features, making it easier and more convenient to use.
Source: Worldpay's Global Payments Report 2024
Nine out of ten Brazilian adults already buy online, an impressive growth compared to the 68% penetration rate of ecommerce in 2020. However, international purchases still have a lot of room to grow, accounting for just 7% of the market. This means that international payment solutions, especially those catering not only to individuals but also to business-to-business (B2B) transactions, still have a vital role in developing the country's digital commerce.
Since 2021, Brazilians have preferred mobile devices for online shopping, accounting for more than 70% of purchases. That has everything to do with Brazil's increasing smartphone penetration. In July, Anatel, the national telecommunications watchdog, reported more than 261 million smartphones in the country – an average of more than one phone per person.
Credit cards are the most used method, followed closely by Pix. Furthermore, credit cards reign supreme among digital services that require recurring payments, such as Software-as-a-Service (SaaS – 79% of transactions) and video and audio streaming (60%).
Worldpay's Global Payments Report 2024 shows Mastercard as the country's leading card scheme, with a 51% market share, followed by Visa (31%), and Elo (14%) – the latter being a joint venture of three of the country's largest financial institutions: Banco Bradesco, Banco do Brasil, and Caixa Econômica Federal.
Source: PCMI analysis, 2023
In addition to overtaking credit cards, in the future, Pix is expected to continue to steal market share from TEDs (wire transfers), boletos bancários (a type of bank slip used for ecommerce payments in Brazil), and debit cards. Given Pix’s current roadmap, the platform also has the opportunity to increase share over recurrent purchases (done by card or boleto using Pix Automatico), credit/debit using NFC capability (Pix atraves de wallets), and international card transactions (Pix International).
Credit cards remain the preferred payment method for recurring services, as well as travel, a sector where purchases still rely significantly on credit. This context will likely change in the coming years as Pix gains new features (read more below).
The 50th edition of the Webshoppers study by NIQ Ebit shows that the top three best-selling online product categories in Brazil in the first half of 2024 were:
Home appliances (38% of the GMV share);
Health (19%);
Perfumery and cosmetics (13%).
Food and beverage and electronics are also frequently among the top categories in the country.
Another interesting source that shows the best-selling products in the country's ecommerce is the Federal Revenue Office's electronic invoices database. According to this, in 2023 smartphones were the best-selling product in Brazilian ecommerce (USD 2.1 billion), followed by books, brochures, and similar printed matter (USD 1.3 billion), televisions (USD 1.09 billion), refrigerators and freezers (USD 1.03 billion), tablets (USD 908 million), and food supplements (USD 764 million).
Among the top national and international marketplaces in Brazil, the ones with more active users (a device having one or more foreground sessions within an app during the month), according to SimilarWeb data from May 2024, were:
Mercado Libre (43.2 million)
Shopee (38.2 million)
Shein (22.6 million)
Magalu aka Magazine Luiza (15.7 million)
AliExpress (9.4 million)
Amazon (8.1 million)
Domestic online stores in Brazil account for 93% of total ecommerce sales. One reason for this is that these online stores are extensions of large Brazilian retailers, such as Magalu; as a result, they have an extensive network of brick-and-mortar stores, which, in turn, offers these companies strong brand recognition and optimises their logistics operations. That said, Chinese companies like Shopee, Shein, and AliExpress have also gained impressive ground in Brazil, and it should be noted that all three have a localised payment experience for customers.
According to data analysis from PCMI, Brazil’s domestic ecommerce market is projected to grow by 39% in 2024, while the cross-border market will likely expand by 24%.
Most of the leading neobanks in Brazil, such as Nubank, Mercado Pago, PagBank, and C6 Bank, expanded their operations by catering to lower-income customers, forcing the incumbents to follow suit. The country's largest financial institutions, such as Itaú, Bradesco, and Santander, as well as state-owned banks, such as Banco do Brasil and Caixa Econômica, had to double down on their digitisation efforts.
According to the latest survey on banking technology by Febraban, the Brazilian banking industry association, seven out of ten banking transactions carried out by Brazilians are now via mobile phones. Between 2019 and 2023, smartphone transactions soared 251% in the country. While the volume of total transactions doubled, transactions via smartphones grew 3.5 times.
When it comes to in-person purchases, transactions are becoming increasingly contactless. According to the Brazilian Electronic Payments Association (Abecs), contactless transactions accounted for 61.1% of card payments in the first half of 2024, up from 48.4% last year. In fact, 78% of Brazilians use cards with NFC technology to make these payments, while 30% use their cell phones.
As it adds new features, Pix will continue to cut into banks’ interchange revenues and compete with the card industry by allowing a new stack of (cheaper and straightforward) solutions to be built on top of its scheme.
In addition to credit cards, industry data suggests the system may already replace a significant portion of debit card transactions in Brazil. According to Abecs, the financial volume of debit card transactions fell by 0.2% to BRL 486.2 billion (USD 89.3 billion) between the first half of 2023 and the same period in 2024.
A new functionality set to go live in February 2025 is expected to boost this trend further: contactless Pix. With it, consumers will be able to register their accounts in their preferred digital wallets and use contactless Pix for in-person payments, much like they do with cards. This functionality will eliminate the only gap in user experience that Pix still has when compared to cards in general.
This context also explains why global players are increasingly integrating with partners capable of connecting them to Pix. Cross-border payment processors such as EBANX, dLocal, Nuvei, and PagSeguro International are examples of such partners.
In addition to Pix's evolution roadmap, the Central Bank has also been pushing for expanding Open Finance and regulating Banking-as-a-Service (BaaS), betting, and crypto players. Open Finance has gradually broken the historical monopoly of large banks over consumer data and credit, giving challengers access to more users and allowing them to offer better and cheaper services to the population. The upcoming rules on BaaS and crypto companies aim to regulate markets that are already developing, providing more legal certainty to both companies and consumers.
Brazil's payment industry has already made great strides in breaking barriers to include more people financially. The next frontier of this movement is B2B transactions. Domestically, tackling the informality of small businesses at the other end of this initial digitisation cycle is crucial for a truly digitised Brazilian economy. Regional and global payment players know this and have been heavily investing in new cross-border payment connections, including payin and payout services. This involves some of the players mentioned above and legacy companies such as Mastercard and Visa. We will see these moves happen more in the next few years, and hopefully, many will find the right formula.
1Payments and Commerce Market Intelligence (PCMI) analysis from its 2023 Ecommerce Datapack.
Based in Sao Paulo, Brazil, Cesar is an Associate Managing Director at PCMI, overseeing strategic research projects in various areas, including fintech, merchant acquiring, payments/money movement, and more. Prior to joining PCMI, Cesar held leadership roles for 15 years at a variety of top payments companies – including XP, EBANX, Rapyd, and Flywire – and banks. Cesar obtained significant experience in global transactions and treasury services via strategic positions at Bank of America, J.P. Morgan, Citi, and Banco do Brasil, among other institutions. Cesar has a B.A. in Business Administration from Universidade Presbiteriana Mackenzie and is fluent in English and Portuguese.
is an advisory group focused on the global payments industry, with over 30 years of experience providing market intelligence to global corporations, executing over 500 client engagements in the payments industry since 1991. PCMI performs custom strategic engagements, including market sizing, opportunity benchmarking, market entry, customer insights, and more, covering over 50 global markets in the Americas, EMEA, and APAC regions. Visit www.paymentscmi.com to learn more.
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