Merchant acceptance is key for new payments methodologies to reach critical mass, to truly become ingrained in commerce.
In Brazil, Meta, in its bid to become a true payments giant across all use cases, is facing significant headwinds.
Meta had been on the path to enable users to send money using WhatsApp to businesses via payments-to-merchant transactions, the Financial Times reported. That launch had been scheduled for last year. Yet, the proverbial runway has yet to be cleared for takeoff.
The headwinds are significant. Merchant acquirers are not signing up, and the central bank has not approved the payments-to-merchant service. In one reported point of contention, acquirers, such as Cielo, want higher fees from WhatsApp.
New Revenue Streams (Maybe)
The payments-to-merchant feature would have been, and still might be, a revenue driver for Meta on top of the peer-to-peer (P2P) functionality that already exists.
But the jousting over fees and the fact that the regulatory climate remains uncertain shine a spotlight on the competitiveness of the market and the greenfield opportunity that’s inherent in Brazil, yes, but also in the Latin American market that has more than 400 million individuals.
Brazil is fertile ground for digital payments adoption and innovation. Paula Bellizia, president of global payments at EBANX, told PYMNTS: “When we think about the growth and explosion of alternative payment methods in Latin America, we also see things like PIX, for example, in Brazil, that is being adopted by 50% of the population. This is not only a trend, but also something concrete happening in the market.”
PYMNTS own data has shown that Brazilian consumers are almost twice as likely to shop with merchants offering their preferred payment method.
In a report released this week titled “Benchmarking the World’s Digital Transformation,” a PYMNTS and Stripe collaboration, Brazil stands out for its relatively high mobile payments penetration online and in stores. Cards still hold sway, as has been seen in pretty much every country that PYMNTS has surveyed. But especially in the on-site commerce setting, mobile payments are a bit less than 15% of the tally.
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Drilling down a bit, 74% of Brazil’s adult population of more than 156 million consumers is connected to the internet. Seventy-seven percent of that population owns a smartphone, indicating that they have the infrastructure in place to transact.
The market for digital payments, as defined by digital wallets use, is fragmented, and certainly so in-store. In Brazil, PayPal has 3.7% share, Big Tech wallets have 1.6%, and “native” wallets have 9.4%, which all adds up to roughly 15%.
For WhatsApp, and for other players that would strive to make inroads into this market, the rewards would be rich, indeed, but gaining merchant acceptance will be easier said than done.