Market roundup: Card industry is about to defy PIX. Or so it says

Card industry is about to defy PIX. Or so it says

Merchants’ acceptance of Brazil’s instant payment system PIX is growing and forcing competitors to adapt. Meanwhile, online shoppers’ use of debit cards — which never really took hold in the country — dropped 20.4 percent in 2022, with credit card offers in the country looking close to their peak.

State of play. The digital experience of PIX — adopted by Brazilians from all social strata at an astounding pace — is getting better than the in-person experience, which makes e-commerce a more challenging payment battleground. 

• While credit cards account for the largest share of online purchases, with double-digit growth year over year, the industry turns to the debit mode to prepare for a major push in 2023.

By the numbers. Brazil’s card industry reached a record financial volume of BRL 3.31 trillion (USD 641 billion) in 2022, up 24.6 percent annually, according to industry association Abecs. Online purchases accounted for roughly 20 percent of this amount, with credit cards representing 97 percent of volume. 

• Growth was driven not only by the resumption of in-person activities last year but by the increasing digitization of payment methods — that is, by more people replacing cash with electronic money.

Yes, but … This same phenomenon did not help debit cards. The total volume of debit card payments grew only 7.4 percent in 2022 (to BRL 992.4 billion) and fell 20.6 percent when considering e-commerce alone.

How it happened. The rise in the use of debit cards for online purchases occurred in 2020, mainly due to the Covid pandemic more than anything else. 

• The BRL 600 monthly payments of Covid emergency aid were deposited by way of an app, through which beneficiaries could withdraw their amounts in cash after approximately 30 days.
• Anyone who wanted access to the money before that could do so via a virtual debit card, hence the jump in online debit card usage.
• With...