Brazil’s digital engagement is falling, but may pick up again

All signs suggest that Brazil is back on track as a digital economy leader, marked by steady increases in digital payment innovation.

PYMNTS’ Q3 2022 ConnectedEconomy™ Index, “How the World Does Digital,” measured how more than 30,000 consumers in 11 countries incorporated digital tools, transactions and other activities into their daily lives. This globally focused edition of the index noted that during the third quarter of last year, overall daily usage generally increased for routine activities compared to more one-off attempts, such as booking travel. Steady growth in daily activities such as messaging, marketplace purchases and online banking indicated sustainable future growth for consumer digital transformation globally.

Brazil’s digital engagement was an exception to the index’s overall trajectory for the quarter in that it declined, dropping the country from second place in digital transformation to fourth. This represents the steepest decline among the countries the ConnectedEconomy™ Index tracks.

However, a deeper look at the data revealed that this contraction may not be as large as it first appeared. After all, Brazil’s combined digital reach, measured as the number of different daily, weekly and monthly digital activities performed by frequency, remains the highest among the countries tracked, achieving a reach score of 17.9. It’s worth noting that Brazil leads all nations we studied in daily engagement, suggesting that everyday interaction with the ConnectedEconomy™ is particularly strong there.

Brazil’s digital engagement drop in Q3 2022 may have been temporary. One reason is that the country was mired in a contentious election campaign during the quarter. Not knowing which way the country would be headed may have caused some economic uncertainty, and therefore market volatility, before the election results were final.

As Brazil moves forward politically, there are already signs that the country and its FinTech sector are already taking digital transformation back as significant players return to the Latin American hub. Equifax is expanding its reach in Brazil through the acquisition of a major local competitor in December. Earlier this month, Accenture announced that it had acquired a Brazil-based cybersecurity firm to launch a cyber industry presence in the region. This follows the trend of large investments before the campaign cycle, such as Google’s $1.2 billion investment last June.

Work is also underway to increase financial inclusion for underbanked populations in Brazil. PayU, a single platform that enables cross-border commerce and payment functionality through a single integration, has seen growth in the country. Pix, an instant payment system launched in 2020 by the Central Bank of Brazil, is now used by 70% of the country’s consumers.

With the election settled and the country moving forward, there is reason to believe that Brazil’s digital transformation may well be back on track.