Fostering inclusion is essential for the future of payments in Brazil
14 May 2017
Digital and financial inclusion are essential for the future of payments. While developed markets see an almost universal penetration of internet and banking services among their citizens, emerging countries, such as Brazil, still face considerable challenges in these areas. Research is producing mounting evidence that the fostering of digital and financial inclusion is vital for getting people out of poverty. Digital payment systems are crucial because they enable people to store, transfer and collect money in an inexpensive way and over long distances. At the same time, such inclusion is also an important growth opportunity for the payment industry.
Mobile devices have become a game-changer in emerging countries. Thanks to their wide use, internet access, online banking and e-commerce is being democratised. Currently, 89 per cent of Brazilian internet users are browsing with their smartphones. Among lower income classes, up to 65 per cent of users are connecting exclusively via mobile devices. Brazil has nearly 140 million internet users and more than 76 million smartphone owners. Despite that, just over 65 per cent of the population has access to the internet.
It is undeniable that there is a lot of innovation in the payments industry, but the unbanked population is often not considered. Overall, we seem to be moving towards a cashless world, but in Brazil and other emerging countries, cash is still king. The heavy use of cash is motivated by both the vast number of unbanked people and security concerns. Therefore, finding ways to include individuals that either prefer to use cash or do not have another option is essential for a more democratic future of payments.
Even with almost 90 per cent of Brazilian adults having some type of banking relationship, the country still has 55 million unbanked adults and more than 20 million without access to any banking service. For this reason, Boleto Bancário, a push payment method created by the Brazilian Central Bank in the early 90s, is still one of the most important means of payment in the country. A Boleto Bancário can be paid electronically or in cash by anyone, even unbanked people. It currently accounts for nearly a quarter of all Brazilian e-commerce transactions. But despite being the second most used online payment method, banks have not worked to modernise the system.
In light of this, creating a solution for the millions of Brazilians who pay with Boleto Bancário and use their smartphones to browse the internet is a way of fomenting their inclusion in the current digital and online trend. “With this in mind, PagBrasil has created its Boleto Flash™, a payment method that enhances the characteristics of the popular Boleto Bancário, lifting it onto the next level with a fully responsive version for mobile devices and an accelerated payment confirmation, while preserving users’ familiarity with it,” explains Ralf Germer (inset, left), PagBrasil’s CEO. He continues: “We truly believe that the payment industry, as well as the e-commerce sector and the overall economy of an emerging country, will only reach full potential with the inclusion of all social groups.”