Mobile phone subscription penetration in Brazil increased from 100.6% in 2010 to 133.5% in 2014 and is anticipated to further increase to reach 153.1% in 2019. Although m-payments have been relatively slow to take off - despite the high mobile phone penetration - this is all set to change over the next four years, Timetric predicts. This is partly related to the government’s approval of a bill in October 2013, giving the Central Bank of Brazil the authority to regulate m-payments. The main goal of the bill is to promote financial inclusion and to define common standards and interoperability between various m-payment initiatives undertaken by the operators.
“Due to a growing youth population and favourable economic conditions, mobile payments are growing at a fast pace in Brazil. The Brazilian government’s support to encourage mobile payment initiatives for both mobile service and payment services providers will likely push the m-payments market into a higher trajectory, placing Brazil ahead of other Latin American countries,” comments Timetric’s Analyst, Kartik Challa.
Emerging use of payment cards leads to reduction in the unbanked population
Despite the country’s economic progress, cash is still the primary payment instrument, as consumers - especially in rural areas - still do not have access to basic financial services. However, payment cards are gradually emerging as a substitute for cash payments, as the government and banks begin to provide access to financial services for the unbanked population. This includes the government’s policy for financial inclusion, the expansion of banking infrastructure in rural regions and the appointment of banking correspondents.
“The government’s concentrated efforts, coupled with the emerging investments in electronic payment infrastructure led to constant reduction in the unbanked population in the country, which reduced from 71% in 2005 to 64% in 2009, and 42% by the end of 2014 – a trend which is expected to continue over the next four years," Challa says.