Understanding the technological advances of payment methods in Brazil
If until recently purchases were mainly made in cash or check, which could be cumbersome and time-consuming, today, however, payment options are much more practical and convenient.
With the emergence of credit and debit cards, consumers now have access to a fast and secure payment method. Additionally, the growth of mobile payment technologies, such as PIX, Apple Pay, and Google Wallet, has allowed people to make purchases with just a tap on their smartphones.
In fact, this change had a significant impact on the Brazilian economy. According to research conducted by Opinion Box, the preferred payment methods on the national scene are:
Let's see, then, how the use of more convenient and secure payment methods in the digital age has boosted economic growth and boosted business across the country.
How does the payment method market work in Brazil
The payment method market in Brazil is comprised of several financial institutions, such as banks and credit card companies, that offer solutions to facilitate the payment of goods and services.
These institutions work together with the Fintechs, financial technology companies, which offer innovative and accessible payment methods to an increasing number of people.
Payment methods are, in their essence, the way in which individuals and companies carry out transactions, such as payments for purchases, money transfers, and other monetary operations. In Brazil, there are different types, including banknotes in cash, credit and debit cards, checks, and bank transfers.
O Central Bank of Brazil is the main regulator of this market, defining the rules and regulations that must be followed by financial institutions and users of these services.
But how exactly do these payment methods work in Brazil? Let's explore a little more about it, understanding how card transactions work, for example.
In the case of payment by credit or debit card, when a person makes a purchase, the payment is processed through a system of purchasers and financial institutions. The acquirer is the company responsible for brokering the transaction between the commercial establishment and the client's financial institution, ensuring that the payment is made in a secure and efficient manner.
The financial institution, in turn, is responsible for managing the customer's account and carrying out payment processing. These institutions are also responsible for issuing the cards and building partnerships with commercial establishments.
For the president of the BC (Central Bank), Roberto Campos Neto, technological advances already solve several problems that existed in this environment, but the expectation is for a even greater digitalization of these processes, with migration to an economy”Tokenized” and and of Open Finance:
“When we talk about payment methods [...], what problem are we trying to solve? Basically, people were looking for a medium that had the following characteristics: safe, fast, cheap, open, transparent and integrated”.
Soon, it will even be possible to integrate all of your virtual and physical financial life in one place. So let's see how this should happen.
Technological advances crucial for the evolution of the financial sector
The financial market is undergoing an accelerated technological transformation and there are several emerging trends that are changing the way in which finance is conducted, among the main ones, we mention:
- PIX;
- tokenization of the economy;
- Open Finance;
- cryptocurrencies;
- Real Digital.
The implementation of PIX, the new instant payment system of the Central Bank of Brazil, has met the need for faster and more efficient financial transactions, allowing users to now make payments and transfers in real time, 24 hours a day, 7 days a week, and is widely adopted by the population:
Another important trend is the tokenization of the economy, that is, the representation of real assets such as digital tokens. This allows assets to be easily traded and transferred from one person to another, reducing the need for intermediaries and making transactions safer and more efficient.
Already Open Finance, also known as Open Banking, is an approach that promotes the openness and interoperability of financial systems, allowing institutions to share data and offer services in a more integrated and protected manner. Not only does this allow clients to have access to a wider range of financial products and services, it also makes it easier to make more informed decisions.
Likewise, cryptocurrencies have gained prominence in recent years. They are technology-based digital currencies. blockchain, which allow secure and decentralized transactions. While some, such as Bitcoin, are used as a means of payment, others are used as speculative investment.
Another trend that has been gaining strength is the digital real. The Central Bank's digital currency (CBDC, in English acronym) will not be a cryptocurrency, but a currency backed by the government and whose value will be linked to a fiat currency, which will make it less volatile than cryptocurrencies and will be a more attractive option for financial transactions, since it allows users to transfer value quickly and effectively. The expectation, according to the president of BC, is that it will be launched by 2024.
https://youtu.be/novmmsx3sgw
What will the future be like with the new payment methods in the country?
The Central Bank of Brazil is working on a new initiative called a “smart digital wallet”. This digital wallet will be a mobile application that will allow users to store, send, and receive the digital Real.
BCB's smart digital wallet is one of several bank initiatives to promote the adoption of digital currencies in the country and facilitate the use of digital assets by Brazilian citizens.
One of the main advantages of the smart digital wallet is that it will allow users to make payments without the need for a bank account. This can be especially useful for those who don't have access to traditional banking services, such as residents of remote areas or people with financial difficulties.
Another advantage is that it will allow international payments to be made more easily and securely. With CBDC, users will be able to send and receive money from other countries without having to deal with the fees and fees associated with the traditional currency exchange.
What's more, this wallet will be protected by an additional layer of security, which includes biometric authentication and end-to-end encryption to ensure that users can carry out transactions with peace of mind.
In fact, the destination of the money is to become digital and in Brazil it will be no different, with an estimate that this project will come to life in the next 1 year and a half according to Bacen.
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