Brazil’s ‘Cash Is King’ Culture Cedes Ground to Convenient Gift Cards, QR Codes

Cash might still be the king of South America’s largest economy, Brazil, where it accounts for over a third of all payments — but as alternative payment methods such as QR codes and gift (and pre-paid) cards explode in use, it may only be a matter of time until it loses that crown.

The popularity of QR codes soared over the last year, at a time when Brazilians switched to making online purchases at a pace that would have been previously unimaginable. While cash is still widely used, more than 80% of Brazilians made at least one online purchase in the last year, according to PYMNTS’ latest Global Digital Shopping Index: Brazil Edition. And importantly, half of those consumers found their online purchases very agreeable, with 40% saying they now make them frequently.

“What we have seen is a doubling of the numbers in channels like grocery shopping and other behaviors that used to be done out of home,” said Fernanda Carbonari, regional vice president of Brazil at Blackhawk Network, in an interview with PYMNTS. “People are switching from dining out to cooking at home, from going to the cinema to home entertainment. And it has led to a pretty impressive rise in the usage of digital payments and QR code payments.”

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Digital payment growth 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 has relaxed many of its COVID restrictions this year and people return to the shops, QR code payments have shown resilience as many buyers, even outdoors, continue to use them instead of cash, the survey found.

Carbonari believes the continued popularity of QR codes in the world’s sixth most populous nation 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 ‘seamlessness.’ For consumers, it doesn’t matter if you’re at home or in the bank; you will consume at the most convenient moment of the day for you, and brands know they need to be there.”

Carbonari said QR codes have rapidly become ubiquitous in society as a result of the pandemic, and that pretty much everyone knows what one is and how to use it. “In Brazil, 74% of consumers are ready to experiment with a QR code purchase. It’s a high number, one of the highest in the world,” she added.

Not surprisingly, Blackhawk Network has seen the light, moving quickly to enable merchants to accept QR code payments. The company’s ScanIt product is used by some of the country’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 need to worry about educating consumers,” Carbonari said. “They’re in the stores, and they know how to use it. Solutions like this are allowing physical retailers to quickly get back into the game.”

Convenience is one of four factors that explains the rising popularity of gift cards. Carbonari explained that gift cards are viewed differently in many markets. In places like the U.S., Canada and India, they are often used by consumers as gifts, whereas in countries such as Brazil, Mexico and Japan, people most commonly buy them for themselves, Carbonari said. Indeed, buying gift cards for self-use is so common in Brazil that they are referred to as “prepaid cards.”

“It’s a cultural thing, because Brazil is by and large a prepaid country,” she explained. “We pre-pay for everything; around 55% of mobile phones are prepaid, meal vouchers are prepaid, transportation 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. With no credit cards, gift cards are a very convenient alternative for consumers who don’t want to carry cash around.

“A third thing is budgeting. People need a way to control their spending during a crisis,” Carbonari said. “Many of our gift cards today are brands related to entertainment, and they’re used for budget control. That’s why people are buying gift cards for self-use.”

Then there’s the loyalty factor. Blackhawk’s research shows that 74% of Brazilians would be eager to use a digital payment if they can get something out of doing so, such as rewards.

“The challenge is, they want something out of that transaction,” Carbonari said. “It’s why gift cards make so much sense with this new reward momentum we have.”