Business

Goldman Sachs reveals the strongest rise of card penetration in Brazilian history and uncertainties in Chile

While Chilean banks are dealing with weaker results, the payments market is growing at a fast pace in Brazil

Goldman Sachs results for Latin America
Goldman Sachs results for Latin America. Photo: ShutterStock

The financial services company Goldman Sachs released yesterday (20) its first reports about the banking system development in Latin America and what we can expect for 2020, bringing great news for Brazil, but also highlighting the uncertain environment in Chile. 

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After the storm of protests started by Chileneans against the increases in fares in the country, Chile went from a stable economy, since it was the first time in the decade that protests in the country reached large dimensions, to an uncertain market. According to the report, all the major banks in the country had to deal with weaker results than expected, but who suffered the most was Santander Chile that had results 47% below the previously forecast made by Goldman Sachs’. 

Despite Chile’s downs, Brazil has a lot of up’s to be excited about, even if the great news doesn’t apply for every player in the local payments market. According to Goldman Sachs, there’s never been such a rising moment for card companies in the country, in 2019 the card penetration reached 36% and it might achieve 40% this year, which represents the highest rate of Brazilian history. 

But with so many players betting on the card industry in Brazil, to survive with a meaningful market-share will be the huge challenge. By the end of the day, not only Goldman Sachs but other financial reports, such as the Fintech100 report by KPMG, have agreed on the rising of Stone and PagSeguro that might have a negative impact on the current market leader, Cielo.

According to the report, while the market share of Stone might growth by 44% and 23% of PagSeguro, Cielo will have to deal with a fall of 15% this year. “We think disruptive players such as Stone and PagSeguro will continue to gain share, given their respective competitive advantages in the SME and micro-merchant segments,” stated in the report, “meanwhile, larger incumbents such as Cielo should continue to lose share, as they adapt their business models to the new competitive environment. 

To investors, the financial company set Stone and PagSeguro’s stocks as those to buy, while Cielo has joined the “to sell” team.