Business

In an ever-growing market, Brazilian acquirers try to increase share

Pushed by the growing competition, Cielo, Stone, and other acquirers will try to compensate low prices with more transactions volume

Cielo card machine. Photo: Rafastockbr/ Shutterstock

The financial landscape in Brazil and Latin America has been watching several changes and the entry of new players in recent years. A fast-growing sector, it’s not by chance that the region has five fintechs among the most innovative in the world, according to the fifth edition of the Fintech100 report produced by consulting firm KPMG. A market at full disruption, it’s not only fintechs that are evolving in the region’s financial market: the acquirers –  companies that operate payments through card machines – are entering a 2020 marked by great competition in the country.

According to information from Brazilian media outlet Valor Econômico, Cielo, the market leader in the country, will review its strategy in order to resume profits, after consecutive drops in its margins due to a strategy that prioritized share over profitability. But for market analysts, Cielo will remain struggling with a fall in profits this 2020.

“There will be pressure on rates this year, but at a slower pace than in the recent past,” said Fabrício Winter, project leader at consulting firm Boanerges & Cia to Valor. “Profits will come from the volume of transactions and the increasing offer of financial services to customers.”

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To tackle competition, in December, PagSeguro cleared the discount rate for debit and credit card purchases for volumes up to BRL 10,000 for new customers for three months. According to Credit Suisse analysts, the promotion is more aggressive than the last one, which considered transactions with volumes up to BRL 1,500, as information provided by the newspaper. PagSeguro, focused on microentrepreneurs, is expected by analysts to overcome Cielo’s net profits for the first time ever, and to increase transactions by 34% – while Cielo’s transactions are likely to grow by 11%. 

On the other hand, the independent firm Stone, is expected to reach a 48% rise in the volume of transactions captured this year, by increasing the regional offices, dedicated to capture and retain customers. The company, which is expected to enter the micro-entrepreneurs sector this year, is also likely to exceed Cielo’s results, as market experts have been predicting. 

While some companies will be able to balance prices reduction with higher volumes; one of the strategies adopted to do so will be aiming at the micro-entrepreneurs sector – that will be one of the most competitive sectors this year. As early as this quarter, Stone will launch a partnership with Grupo Globo to reach entrepreneurs who transact about BRL 2,000 per month on the card machines. So far, the company was focused only on customers who earned around BRL 20,000 monthly. Santander‘s company Getnet, on the other hand, has increased sales of its card machine SuperGet, which reached a record of 100,000 units sold per month.