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pay world
Brazil Beckons
verticals launch new payment products and generate new reve- nue streams from existing client bases, according to Pérez. “We’re also helping others already in the payments business interconnect existing assets to enter new spaces versus a direct program manage- ment play.”
NovoPayment’s current approach
in Brazil includes pursuing program design, consulting services and PaaS opportunities with companies in the country. “Our platform is fully localized for language and currency, which we offer through a bank-grade, private-cloud solution,” Pérez says. “We don’t have a local operation yet, but that’s the medium term plan.”
Pérez says the new regulatory framework for electronic money encourages transparency and efficiency by requiring firms to comply in terms of operations,
IT and security. The regulations also will level the playing field and enable more players to enter the market, she predicts.
Barriers to Adoption
While many experts are optimistic about the prepaid and mobile opportunities in Brazil, companies entering the market will confront hurdles. The use of cash in Brazil
is still high (see page 59); however, the popularity of credit and debit cards has increased in recent years, in part, because of an expanding middle class, according to Tristan Hugo-Webb, associate director, global payments advisory service,
meal tiCket: goveRNmeNt-BaCked fRee lUNCheS
Brazilian companies have offered employees meal vouchers
to pay for their lunches for roughly 40 years. Companies receive tax breaks for offering them, and the vouchers are perks Brazilian
employees expect. Approximately a decade ago, the vouchers switched from paper to a more convenient prepaid card. The types of benefits that companies offer as part of their voucher programs have evolved
beyond meals and now include discounts at retailers, fitness memberships and transportation.
Companies also earn tax breaks by providing “culture” vouchers, according to Florent Lambert, Sodexo’s chief of marketing, strategy and innovation
in Brazil. Culture vouchers can be used by employees to buy books,
take education courses, and buy tickets to concerts and plays, among other benefits.
The Vale+Cultura Visa Electron is Visa’s culture voucher program and employers typically load about $25 per month for their employees, says Jose Coronel, senior director of prepaid products for Latin America and Caribbean, Visa.
Competition among about 150 different voucher program providers is fierce in Brazil, but the market is dominated by three heavy hitters: Edenred, Sodexo and Alelo.
Mercator Advisory Group. Although Mercator hasn’t tracked prepaid usage specifically, Hugo-Webb suggests more Brazilians paying with plastic instead of cash could bode well for prepaid usage.
But, convincing consumers to ditch cash is one of the biggest barriers to prepaid/mobile money adoption in Brazil, according to Sergio Gold- stein, managing partner, S Goldstein Consulting, who is based in São Paulo. In addition to attracting the middle class, there also are chal- lenges for companies specifically targeting unbanked/underbanked consumers, including a general distrust of banks, fee and security concerns, and the less tangible nature of electronic payments compared with cash, according
to Goldstein.
But, he suggests there are a num- ber of use cases worth exploring, including parents giving allowances to children; paying employees, such as gardeners and maids; and mobile P2P payments to reach the youth market. E-commerce also is an interesting opportunity, he says,
as more Brazilians are making purchases on the Web and through their mobile phones, buying digital content, for example. Prepaid cards could be a good payment alterna- tive for consumers who don’t want or can’t get a credit card.
Prepaid companies that enter Brazil also face a learning curve, accord- ing to Gilles Coccoli, chief operat- ing officer, Edenred Brazil. Parent company Edenred is a prepaid card and B2B voucher provider based in France. The company has operated