Will Payment Card Transactions Keep Seeing Big Growth?
Credit- and debit-card transactions in Brazil are expected to grow as much as 20 percent this year, according to industry group Abecs. Last year, card payments grew 8.2 percent, an increase largely driven by a government aid program to help low-income residents weather the economic effects of the pandemic. Will the trend of increasing payment card usage continue in Brazil, and will other Latin American countries see similar growth? Has the pandemic dealt a major blow to the use of cash in the region? After the pandemic ends, what factors will most influence the growth of payment card usage in the region?
Steven Sandretto, partner at Holland & Knight LLP: “While the spike in credit- and debit-card transactions in Brazil over the past year can largely be attributed to the pandemic, the underlying driving forces for card usage, such as growth in e-commerce and the fintech revolution, should continue long after the pandemic has ended. As e-commerce continues to grow in Brazil and throughout Latin America, card transactions should continue to rise. Notably, almost a third of the Brazilian population does not have a bank account, and access to credit is limited. The fintech revolution is changing this, and as more of the population has access to bank accounts and credit and debit cards, usage should continue to rise in the foreseeable future. For example, one driving force for debit-card payments in 2020 was the government aid program to assist low-income residents affected by the pandemic. In connection with this program, state-owned bank Caixa Econômica Federal created digital accounts linked to virtual debit…”Read More
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