Exclusive study offers insights into consumer’s understanding of debit cards, consumer profiles, challenges and opportunities in a market which grows 25% annually.
São Paulo, October 2, 2012 – The debit market in Brazil is set to double in size by 2016 and will be worth up to 493 billion BRL. This is one of the results from the “Debit Card in Brazil” study carried out by MasterCard Advisors, the professional services arm of MasterCard (NYSE:MA), which seeks further insights into Brazilian consumers’ knowledge of debit cards, consumer profiles in comparison to other payment methods and identifies barriers and opportunities in various areas of the economy, quantifying the current market and its potential growth in future years.
According to the study, debit cards have been the fastest-growing payment method over the past five years, rising 25% annually, ahead of private consumption in Brazil, which grew 12% annually during the same period (between 2006 and 2011). Cardless transactions, such as payments using cash, checks and bank transfers, have risen 9%. “The rise in debit card usage has been driven not just by economic growth, but also by increasing access to banking services and a greater understanding about this type of payment method,” said Gilberto Caldart, head of MasterCard Brazil and Geo South.
Of the many payment methods available, debit cards are still consumers’ second choice but the gap between debit and cash, which is in the top spot, is shrinking. The survey reveals that between 2005 and 2012, consumer preference has risen from 26% to 34%. The preference for cash fell from 60% to 48% over the same period. “The perception that debit cards provide spending controls and are smart, simple and safe to use has increased in recent years. This is why we believe this 200 billion BRL market could double by 2016, when it will represent between 370 billion BRL and 493 billion BRL in debit spend,” said Caldart.
The study also reveals that the main debit benefit reported by consumers was security, cited by 67% of users, followed by convenience (37%) and control, attracting 31% of the responses. “This is a result of the work done by the industry to educate consumers and invest in card technologies”, said Alexandre Magnani, Vice President of New Business Development of MasterCard Brazil and Geo South.
The most attractive benefits to increase card usage over cash are promotions, rewards and sweepstakes, mentioned by 36%, and air miles programs, by 18%. “MasterCard understands which benefits are most valued by consumers and based on this, it has been running a campaign to encourage debate card usage since 2010,” said Magnani. The 2012 MasterCard promotion, called “Living Brazil Is Priceless”, has recently been expanded to include credit and business cards with rewards such as trips to Brazilian destinations, prizes worth 100,000 BRL and weekly draws of prepaid cards worth 5,000 BRL each.
On the other hand, figures show that there are still many growth opportunities in this market. Only 18% of all card transactions in Brazil involve merchants’ POS, whereas 82% of transactions are still cash withdrawals. “We have noted that certain barriers still exist, like the habit of using cash because it is seen as a simpler payment method. To overcome these barriers, we are developing solutions and technologies to offer products and services which are increasingly adapted to the needs of our clients. And one of the areas the company is investing in to make consumers’ everyday purchases easier, now and in the future, are proximity payments like MasterCard PayPass,” said Caldart.
In order to provide further insights into the debit card market in Brazil and principally understand consumer card behavior, MasterCard contracted MasterCard Advisors, the professional services arm of MasterCard, to carry out a study. This was the second edition of the study, which was previously held in 2005. This study used a wide variety of market and transaction data from MasterCard Advisors and a consumer survey carried out in partnership with the Ibope Institute. There were 15 focus groups organized and 727 consumers holding deposit accounts were interviewed in five Brazilian state capitals: São Paulo, Rio de Janeiro, the Federal District, Porto Alegre and Recife. The groups and surveys organized by Ibope in 2012 used random sampling. For small business study, there were 4 additional focus and 80 additional interviews.