Two years is a long time for technology development. Back in 2015, several home-grown mobile payment apps were taking off. Still, none of the big players was showing a real interest in the country.

Fast forward two years and the mobile payments landscape is very different. The major players are betting big on Brazil: Samsung Pay arrived in 2015, and Google Pay was launched in October 2017.

Now, Android Pay finally arrived in Brazil too. It operates with near-field communication (NFC) technology, the same way Samsung Pay and Google Pay does. Despite coming just after Google Pay, the launch of Android Pay is a potential game-changer.

The Hurdles

While Apple Pay has yet to be launched in Brazil and Samsung Pay has had a relatively low adoption rate so far, Android Pay has a promising future, at least on paper.

On the upside, smartphone penetration is growing exponentially in Brazil. In 2016, 70% of the population already was already using a smartphone compared to only 33% in 2012. This is mainly due to the sales of mid-range, affordable handsets.

Android OS holds a market share of 82.8% (as of January 2017) in Brazil, according to Statista. Android Pay also partnered with the biggest Brazilian banks (Banco do Brasil, Itaú, Caixa and Bradesco) and credit card issuers MasterCard, Visa and Brazil’s own Elo.

However, Brazil’s financial inclusion is a different story altogether: only 30% of the population has a debit card, and credit card penetration is even lower (according to World Bank data). To use Android Pay or any of the other mobile payment services, users will have to link a debit or credit card to the app. So, those who own a smartphone but do not have a debit/credit card will not be able to use the service.

The Future of FinTech

Traditional financial institutions, like retail banks, have lagged behind in emerging economies – financial inclusion is clearly happening in the FinTech sector. The FinTech scene in Brazil is booming, and São Paulo is putting financial technology on the map in Latin America – that means, a person does not need to go through a bank to get credit, make payments or send money to friends (P2P). This is a trend not only in Brazil but in all emerging economies.

Other adjacent issues are getting in the way of mobile payments adoption. For instance, problems with NFC technology itself and a widespread lack of trust in mobile payments – 44% of Brazilian internet users are concerned with fraud when making a purchase through mobile wallets or apps.

Even with all the hurdles in place, major players believe that Brazil has reached a certain level of technological maturity and financial inclusion. The next few months are going to be crucial for Android Pay and Google Pay, and high adoption will be key.

This article was originally published on The Market Mogul

 

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