Brazil Is a Carnival of LatAm Digital Payments Innovation

Brazil gave us the samba and the sizzle of Rio de Janeiro, but it also serves as Latin America’s hotbed of payments innovation, with a mobile-digital mindset all countries can learn from.

As an example of the connected economy, Brazil is beaming — pioneering national payment rails faster than the U.S. and advancing mobile connectivity in ways that could make the European Union envious.

Discussing the Latin American digital payments landscape from a Brazilian perspective, EBANX CEO and co-founder João Del Valle and Paula Bellizia, president of global payments at EBANX, told PYMNTS that the company and its peers are taking payments anywhere they can possibly go in 2022.

“Latin America is extremely connected,” Bellizia said. “We have a young population. We see the adoption of mobile.

“When we think about the growth and explosion of alternative payment methods in Latin America, we also see things like PIX, for example, in Brazil, that is being adopted by 50% of the population. This is not only a trend, but also something concrete happening in the market.”

PIX is the national instant payment solution put in place by the Brazilian Central Bank in 2020.

The 2022 Global Digital Shopping Index, a PYMNTS and Cybersource collaboration analyzing behaviors of over 13,000 consumers and 3,100 merchants in Australia, Brazil, the United Arab Emirates, the U.K., the U.S. and Mexico, finds Brazil leading in some ways, providing a model for the region.

Among more interesting datapoints is the fact that Brazilian consumers are almost twice as likely to shop with merchants offering their preferred payment method. In 2021, 52% more Brazilian merchants offered digital profiles, and a staggering 76% say they enable voice pay.

Del Valle said, “That all ends up being good for merchants and consumers because it’s connecting more people. It’s the mission of our company to give access to Latin Americans to global commerce. It’s happening all over Latam. [There’s] a very important role played by the FinTechs to provide better services and better connectivity to consumers and merchants.

“Although it sounds simple and smooth for the consumer, there’s a very complicated backend of integrations and players in these systems that need to innovate and adapt to serve this new world of omnichannel and omni-consumer.”

Get the study: 2022 Global Digital Shopping Index

Mobilizing Money for a Continent

With a population north of 425 million people and smartphone penetration at around 70%, Latin America is serving as an incubator for digital convenience and connectedness. It arose out of necessity vastly accelerated by the pandemic and is changing the region in surprising ways.

Mobile is the key for Brazil and Latin America more broadly, as companies like EBANX work the kinks out of cross-border payments and evaluate new opportunities within the region and beyond.

The second edition of Global Digital Shopping Index found that in-store use of mobile phones increased nearly 10 percentage points in 2021, where 23% sought coupons and discounts.

Payments choice is another area where mobile comes increasingly into play in Latin America. As PYMNTS research found, consumers in the region are 63% more likely to shop with a merchant offering their preferred payment method.

“We do [research] every year called Beyond Borders,” Del Valle said. “Part of it is related to PIX. One simple data point is that all of the people that used PIX in the last transaction, think it’s 30% or 38%, are going to choose PIX in the next purchase from that merchant.

“There’s some bond there which is more than analytics. It’s a sentimental bond that you [form] with that payment method because you found it convenient.”

Choice and convenience are important markers of connected economy payments that handle anything from big-dollar cross-border transactions to miniscule in-app micropayments. Wherever you place the emphasis, reliable interconnectedness is at the core.

“If you look at streaming and gaming and the experiences that go with online gaming, [connected consumers] require the same experience in every channel on every device,” Bellizia said. “It’s something that we’ve been watching super closely, in terms of our contributions to this experience of becoming part of an ecosystem in gaming and streaming. And mobile plays a huge role if you think about demographics of Latin America.”

She added, “Where we’re coming from in the tech industry, everything is going to be connected. So, payments needs to be delivering a great experience as part of the entire journey of the consumer, meaning gaming, traveling, consuming, buying, purchasing — everything.”

Using EBANX client Spotify as an example, Del Valle said, “Spotify [has] producers that put content on the platform, podcasters or musicians, artists — they all need to get paid. There’s a whole funds management aspect behind it. They just released one feature in the U.S. that’s super interesting: If you have a podcast, you can start charging for the podcast.”

That speaks volumes about the power of payments to transform commerce via connectivity.

“Spotify was a company that was a very simple business model, just subscriptions,” he said. “Now, it’s becoming more elaborate. And of course, all the infrastructure has to support that because that’s a transaction — that’s a pay in, that’s pay out — but that’s also funds management in a cross-border fashion. The infrastructure has to really be ready.”

See also: 34% of Consumers Use Their Smartphones to Help Them Shop in Physical Stores

Cross-Border First, Metaverse Next

In 2022, it’s hard to have a payments tech talk without mentioning the metaverse. Like others, EBANX is thinking and planning — but then again, they think we’re already at least visiting the metaverse in our everyday digital interactions, so payments isn’t a leap of imagination.

“I think we are just leaving a moment [where] maybe we were already in the metaverse. Why? Working online and through screens,” Bellizia said. “The metaverse is part of our lives in a way.”

Del Valle added, “The gaming industry has been there for a while, creating virtual things, selling virtual things and items and such and with infrastructure for that. Now there’s a new layer for it, maybe part of it, along with crypto and blockchain. It’s super interesting, with payments again playing a very key infrastructure role, even inside the private metaverses.”

Before EBANX likely makes any major metaverse announcements, it will continue to chip away at the frictions that slow money movement while enabling greater engagement.

“Cross border payments is really in the early, early era of its expansion,” Del Valle said. “Businesses are going more global. People are becoming more global, so we can expect more companies to sell goods and sell services across borders, and that needs infrastructure.

“[We are] really the beginning of that era. Fast expansion of cross border payments is definitely a trend that’s going to continue in 2022.”

Read more: Travel in Latin America Is Recovering, Going Digital