Brazil’s cash culture gives way to gift cards
Cash is perhaps still the king of South America’s largest economy, Brazil, where it accounts for over a third of all payments, but like alternative payment methods such as QR codes and gift cards (and prepaid) are exploding, it may only be a matter of time until he loses that crown.
The popularity of QR codes has skyrocketed over the past year, as Brazilians have shifted to online shopping at a rate that would have been previously unimaginable. Although cash is still widely used, more than 80% of Brazilians have made at least one purchase online in the past year, according to PYMNTS ‘latest Global Digital Shopping Index: Brazil Edition. Most importantly, half of these consumers found their online purchases very enjoyable, with 40% saying they now do so frequently.
“What we have seen is a doubling of the numbers in channels like grocery shopping and other behaviors that were previously practiced outside the home,” said Fernanda Carbonari, Regional Vice President of Brazil at Blackhawk Network, in an interview with PYMNTS. “People go from dining in restaurants to cooking at home, from movies to home entertainment. And that has led to a pretty impressive increase in the use of digital payments and QR code payments. “
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Growth in digital payments was to be expected last year, with the COVID-19 pandemic forcing more of the country’s 210 million citizens to stay at home. But as the country relaxed many of its COVID restrictions this year and people return to stores, QR code payments have been resilient as many shoppers, even outside, continue to use them in the country. instead of money, according to the survey.
Carbonari believes that the continued popularity of QR codes in the world’s sixth most populous country comes down to their ease of use and versatility.
“QR codes have joined the game because they merge two worlds, online and physical,” she said. “My two favorite words for business are ‘convenience’ and ‘transparency’. For consumers, it doesn’t matter whether you are at home or at the bank; you’ll be consuming at a time of day that’s most convenient for you, and brands know they need to be there.
Carbonari said QR codes have quickly become ubiquitous in society in the wake of the pandemic, and that almost everyone knows what one is and how to use it. “In Brazil, 74% of consumers are ready to experiment with purchasing a QR code. This is a high number, one of the highest in the world, ”she added.
Unsurprisingly, Blackhawk Network saw the light of day, rapidly evolving to enable merchants to accept QR code payments. The Company’s ScanIt product is used by some of the nation’s largest retailers – and it has seen fairly rapid adoption, precisely because QR codes are already so familiar.
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“You don’t have to worry about educating consumers,” Carbonari said. “They are in the stores and they know how to use it. Solutions like this allow physical retailers to get back into the game quickly. ”
Convenience is one of the four factors behind the growing popularity of gift cards. Carbonari explained that gift cards are viewed differently in many markets. In places like the United States, Canada, and India, they are often used by consumers as gifts, while in countries like Brazil, Mexico, and Japan, people buy them most often for them. themselves, Carbonari said. Indeed, the purchase of gift cards for personal use is so common in Brazil that they are called “prepaid cards”.
“It’s a cultural thing, because Brazil is overall a prepaid country,” she explained. “We prepay for everything; about 55% of cell phones are prepaid, meal vouchers are prepaid, transport cards are prepaid.
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Gift cards also make sense in light of Brazil’s cash economy, where credit card penetration remains very low at less than 40%, Carbonari said. Without credit cards, gift cards are a very convenient alternative for consumers who don’t want to carry cash.
“A third thing is budgeting. People need a way to control their spending during a crisis, ”Carbonari said. “Today many of our gift cards are entertainment brands, and they are used to control the budget. This is why people buy gift cards for their own use.
Then there is the loyalty factor. Blackhawk research shows that 74% of Brazilians would be keen to use a digital payment if they could get something from it, like rewards.
“The challenge is that they want something from this transaction,” Carbonari said. “That’s why gift cards make so much sense with this new rewards momentum that we have. “