Brazil Prime for Mobile Payments in 2014
At a recent webinar on the state of mobile payments in Brazil, Paytroniks president Joe Frisz gave a strong endorsement for the development of mobile payment solutions in that country for 2014. Frisz identified several factors, including a sizable market opportunity, increased smart phone adoption, and favorable government regulation. However, he did cite that challenges still remain, among them low familiarity of mobile payment solutions by Brazilian consumers.
"Without question, Brazil should become one of the largest mobile payment markets in the world within the next 5 years, and 2014 will see major initiatives being announced be key players such as telcos and financial institutions." Some of the facts that Frisz mentioned for Brazil's attractiveness included mobile penetration rates of over 140%, smart phone penetration which should reach over 40% in 2017, and a 60% average revenue per user increase for mobile subscribers despite an overall slowdown of the Brazilian economy in the past 18 months.
In addition, Frisz stated that ongoing favorable regulation by the National Monetary Council (CMN) will only serve to increase Brazil's attractiveness. He commented that the guidelines offered by the CMN are striking a right balance between encouraging competition and mobile payments development while at the same time protecting consumer's rights by insisting that providers provide full transparency to the consumer on the risks associated with these products.
"The announcements by the CNM pave the way for operators, person-to-person solution providers, and other non-financial institutions to develop solutions for the market. What the central bank of Brazil and CMN are saying is that mobile payment solutions can become a conduit for increased overall financial inclusion for Brazilians without necessarily including banks. This will result in an increased business proposition for the solutions and a shorter path to mass adoption. At the same time though, the CMN remains vigilant of protecting consumers from abusive or misleading business tactics and reserves the right to apply stronger regulation if necessary."
Frisz did state that substantial barriers to mobile payments growth still remain, the most prominent one being consumer readiness. "Despite the strong market opportunity, the fact remains that Brazil scores very low in several studies measuring consumer readiness for mobile payment solutions." Among the issues affecting Brazilian consumers, Frisz pointed to inferior cell phone infrastructure in large areas of the country and concerns about personal information being stored on the phone. He mentioned that key drivers for market growth are ongoing consumer education by the public and private sector on the benefits of mobile payments and solutions that can be used on smart and non-smart phones. "Ideally, any solution that is launched in this market should be applicable for high end smart phones all the way down to low end flip phones. These all-encompassing solutions should help increase consumer readiness."
Frisz also mentioned that he did not see Near Field Communications (NFC) becoming a prominent mobile payment technology enabler. “Beyond enhanced market positioning, it is hard to see why any company would only want to focus on NFC as a primary mobile payment solution.” He cited how the technology has struggled to gain traction outside of Brazil in countries where smart phone penetration is much higher. In addition, Frisz concluded the webinar by stating that the consumer will not be paying attention to the enabling technology when choosing a mobile payment solution, rather the main decision criteria will be the consumer’s interaction with the mobile wallet installed on their phone, integrated loyalty programs, and security guarantees relating to the personal data stored on the mobile device.
For more information on the webinar, click here.
Founded in 2009, Paytroniks, http://www.paytroniks.com is a consultancy exclusively dedicated to research and evaluation of emerging payments solutions. Our services include product development, growth strategies, solution optimization, and market research. Our areas of expertise are mobile payments, prepaid cards, and merchant acquiring. Call us today at 469-271-4774 for more information or send us an email at info(at)paytroniks(dot)com.