June 27, 2014

Brazil: Revolutionizing Mobile Payments

Posted by Frannie Jackson

The sun is shining, Luis Suarez is biting, and the vuvuzela’s are mercifully absent from the 2014 World Cup matches. While all eyes are drilled on Brazil as one of the biggest events in sports takes over the country, the nation is also stealing the spotlight in a far different market: m-commerce.

Brazil boasts 273 million active mobile lines amongst a population of over 201 million individuals. In other words, there are far more mobile phones than people. A whopping 100 million are smartphones, 15 million of which are NFC-enabled.

Those 15 million phones could very well hold the key to the future of mobile payments.

Near field communication (NFC) defines smartphones and other devices that can transfer information — either through touch or being in the same vicinity — to another device. The radio communication established allows smartphone owners to do anything from pay bills to download the World Cup schedule. Sure, NFC-enabled devices are convenient, but they’re hardly unique to Brazil. So what sets the country apart?  As of last year, President Dilma Rousseff signed Federal laws that encourage consumer adoption of mobile payments.

The term “government regulation” tends to insinuate frustration and red tape, but Brazil is transforming the concept. Last fall, Rousseff approved a law emphasizing “interoperability between mobile network operators, bank card issuers, acquirers, and the card brands.”  Basically, the law encourages increased simplicity in payments with greater accessibility to Brazilian citizens.

Banco Santander, a Spanish banking group, launched their University Smart Card service in Brazil this spring in light of the new law. The service operates through an NFC–enabled microSD card, which allows students to make payments in university canteens and even access university buildings.

Banco do Brasil is dreaming even bigger after partnering with Visa and network operator Oi on an NFC mobile payment pilot. The program allows consumers to link their Visa-branded Banco do Brasil card to a SIM card in their smartphone through an Oi app. Consumers can then use their smartphones to make mobile payments at any of the 1.4 million NFC terminals across Brazil.

Percival Jatobá, Visa’s Vice President of Product Development in Brazil, claims the pilot is part of a “silent revolution” in the country. “We’re not scaling commercially just yet,” he says in a Mobile Payments Today interview, “but it will happen. The needed infrastructure is already in place. It make it a lot easier to scale and go commercial.”

Jatobá’s optimism for the future of mobile payments in Brazil makes sense, given that Euromonitor International estimates 90% of all mobile lines in Brazil will be smartphones by 2017. With legislation increasing the ease of consumer adoptability of NFC-enabled technology, programs like Visa’s could soon be available to the majority of the country’s population.

NFC use is already growing beyond mobile payments, further cementing its place in Brazil’s future. This month alone witnessed 5,000 NFC and QR stickers appear in bus stops throughout Rio de Janeiro, providing smartphone owners with bus route information, details about tourist destinations, and current event updates (including the FIFIA World Cup scores). Between legislation and practical applications, it looks like Brazil is set to become one of the biggest players in global m-commerce.