The Brazilian market for payment gateway providers has experienced rapid growth over recent years. This has subsequently caused lower service charges and more options for merchants.
Due to the increased competition, some payment gateway providers have been forced to close their operations while others have doubled down on the Brazilian market by expanding into credit card acquirer services.
Market Size and Volume
The market for payment gateway providers in Brazil is by itself unregulated. The most accurate statistics we have is for cards issued and card transactions. This data is published by the Brazilian Central Bank.
Highlights of the Brazil market include:
- 165 million credit cards issued as of 2016
- 317 million debit cards issued as of 2016
- 258 million private label cards issued as of 2013
- 5.744 billion credit card transaction as of 2016
- 6.717 billion debit card transaction as of 2016
- Debit card transactions have had a stronger growth than credit cards since 2012
Online Payment vs e-Commerce Payments
When trying to estimate the total market size for payment gateway providers in Brazil, a distinction must be made between credit card transactions without physical presence of the card and e-commerce.
e-Bit estimates the market size for e-commerce in Brazil to be BRL 44.4 billion annually as of 2016, while Abecs reports that credit card transactions without physically using the card was responsible for 645.6 million transactions in 2016 reaching a total value of BRL 133.6 billion.
Although the difference between the two numbers seems large, it is most likely explained by the ever increasing amount of services like mobile phones, gym memberships and taxi rides that are automatically being charged to credit cards without being categorised as e-commerce. It is also worth noting that in general, Brazilian payment gateway providers do not process payments related to gambling.
Given that most payment gateway providers in Brazil provide more than just credit card services, it is reasonable to believe that the total value processed through payment gateway providers in Brazil is reaching close to BRL 150 billion annually.
Cost of Payment Gateway Services in Brazil
Due to increased competition among payment gateway services in the Brazilian market, transaction prices have been reduced significantly for merchants with large transaction volumes. For a merchant without proof of current transactions volume, the fee tends to be between BRL 0.50 and BRL 0.90 per transaction, while merchants with large volumes can expect to pay around half of this.
Most payment gateway providers in Brazil have minimum monthly commitment levels and some also have mandatory requirements for the merchants to contract anti-fraud services which are charged separately.
Large Brazilian Payment Gateway Providers
Braspag is one of the largest and most established Brazilian payment gateway providers, being founded in 2005. They are one of the most complete service providers in the Brazilian market.
Grupo Silvio Santos acquired Braspag in 2009 for BRL 25 million but the company was quickly sold to the Brazilian acquirer Cielo for BRL 40 million in 2011. The quick sale of Braspag from Grupo Silvio Santos to Cielo was promoted by the need of Grupo Silvio Santos to resolve financial irregularities in other partners of the group.
At the time of the sale in 2011, Braspag was responsible for 65% of all online payment transactions in Brazil. Cielo is a public trading company but does not report market share data for Braspag. However, the market share is expected to have been reduced significantly since 2011 as competition has increased over recent years.
maxiPago! was established in 2011 by some of the management team from Braspag. maxiPago! was purchased by the acquirer Rede in 2014. The acquisition came just one year after Rede attempted to launch a Brazilian payment gateway service based on the Datacash solution from MasterCard.
At the time of acquisition in 2014, maxiPago! had 1300 merchants and 18 employees. Although the transaction value has not been publicly announced, Rede`s parent company Itau Unibanco did publish a consolidated financial statement in February 2017 suggesting a transaction value of BRL 14.5 million. The acquisition was part of Rede's strategic goal of reaching 20% market share of online payment processing by 2018.
As of 2017 maxiPago! has 4.000 Brazilian merchants.
MundiPagg is the third largest payment gateway provider in Brazil. Just like maxiPago!, MundiPagg was established by people from the management team of Braspag, but unlike Braspag and maxiPago!, it has not yet been acquired by any other company.
Arpex Capital is a significant investor in MundiPagg, and they also have significant investments in the acquirer Stone. In addition to their engagement in MundiPagg and Stone, Arpex Capital have recently completed a successful exit from their investment in the sub-acquirer Moip.
MundiPagg is aggressive in their PR claims, where they say that they are processing 40% of all e-commerce transactions in Brazil as of June 2017, with more than 7.000 Brazilian merchants.
Adyen is a Dutch payment provider focusing onmid, large and enterprise e-commerce merchants. They are the only large foreign payment gateway provider that is directly operating in the Brazilian market at the moment. Adyen established themselves in the Brazilian market in 2011 and reached an annual local processing volume of BRL 22 billion in 2016.
Unlike the other large payment gateway providers in Brazil, Adyen has chosen to expand their operations from payment gateway provider to be a full fledged acquirer service. For their merchants, this means that there is no need to have an acquirer in addition to a payment gateway provider.
Adyen has partnered with the Brazilian bank Bonsucesso in order to meet the financial and regulatory requirements to operate as an acquirer in Brazil.
Aside from the payment gateway providers we mention in this article, there are another 20 companies operating in this segment. If you would like to know more about this market, please contact us.