Revolution in Payments: How Digital is Transforming Brazil and Europe

Payment habits are constantly evolving, driven by technological innovations, cultural changes, and economic conditions. Two recent studies — “O brasileiro e sua rela??o com o dinheiro – 2024” and “Study on the payment attitudes of consumers in the euro area (SPACE) – 2024” — provide important insights into how people handle different payment methods in Brazil and the euro area, respectively. Although each context has its peculiarities, some trends are universal, reflecting transformations in the global landscape.

Digitalization and Payment Methods

1. Growing Adoption of Digital Payments: In both contexts, a decline in the use of cash is observed. In the euro area, only 52% of point-of-sale (POS) transactions were made in cash, a significant drop compared to previous years. In 2016, cash represented 79% of POS transactions, dropping to 72% in 2019, 59% in 2022, and finally, 52% in 2024. This reduction reflects the accelerated transition to digital payments and the increased adoption of cards and mobile devices.

In Brazil, the reduction is also remarkable: in 2020, about 40% of transactions were conducted in cash, while in 2024, this percentage fell to less than 20%. Pix, in turn, already accounts for 70% of digital transactions, with over 26 billion transactions recorded in 2023. Additionally, the "Pix Card," developed by Brazilian fintechs, combines instant payment functionality with accessible credit, offering an alternative to traditional credit cards. This solution serves underserved populations and promotes greater financial inclusion.

1. Impact on Financial Organization: The multiplicity of payment methods, although convenient, can complicate personal financial organization. In Brazil, 78% of consumers report using more than one payment method regularly, and 65% report difficulties monitoring their expenses. Expanded access to digital solutions like Pix requires greater financial education to ensure users do not lose control of their finances. On the other hand, in the euro area, greater stability is observed in the payment methods used, with cards leading the preference in 45% of transactions by value.
2. Adaptation to Local Contexts: In Brazil, Pix has been an inclusive tool that meets the needs of different social groups. In 2024, 75% of transactions made with Pix were conducted by users earning up to two minimum wages. Meanwhile, in Europe, solutions like digital wallets and mobile payments are still in the adoption phase, with significant differences between countries. For instance, in the Netherlands, 76% of online purchases use digital wallets, whereas in other countries like Germany, this figure is below 50%.

Central Bank Oversight and Cash Circulation

The Central Bank of Brazil plays a central role in regulating payment methods and cash circulation. The implementation of Pix was a strategic initiative that not only democratized access to digital payments but also enabled greater monitoring and control over the flow of resources. In 2024, cash usage is estimated to represent less than 20% of the total transaction volume in Brazil, while Pix is accepted in over 90% of commercial establishments.

In the euro area, digitalization has also prompted changes in how central banks manage payment options, focusing on ensuring access to physical cash in a context of growing preference for digital methods. Initiatives like the digital euro aim to complement the payments ecosystem, ensuring greater security and inclusion.

Financial Education and Digital Inclusion

To maximize the benefits of digitalization, it is crucial to invest in financial education. Disseminating information on how to manage multiple payment methods is essential to avoid excessive debt and ensure consumers reap the benefits of digital solutions. In Brazil, educational campaigns targeting low-income communities have already reached 2 million people since 2021, helping integrate marginalized populations into the formal financial system. Tools like Pix Card play an important role by offering simplified credit, expanding possibilities for responsible consumption.

In Europe, financial education is equally important, especially for older populations who face difficulties adopting digital technologies. In 2024, about 10% of consumers in the euro area reported needing assistance with digital payments, highlighting the need for accessible and inclusive solutions.

Future Perspectives

Both studies point to greater digitalization in payment habits, but with distinct challenges. In Brazil, the challenge will be to expand financial inclusion by leveraging technologies like Pix to replace traditional credit methods and promote greater financial control among individuals. In the euro area, the focus is on ensuring digital accessibility for older and less-educated populations while advancing the implementation of solutions like the digital euro.

The coexistence of multiple payment methods — cash, cards, and digital solutions — will remain essential to meet the needs of diverse consumers. These studies demonstrate that the future of payments is deeply rooted not only in technological innovations but also in the ability to educate and financially include all population layers, fostering a more inclusive and efficient economy.

References

ASSOCIA??O BRASILEIRA DE BANCOS. O brasileiro e sua rela??o com o dinheiro – 2024. S?o Paulo, 2024. Available at: https://www.bcb.gov.br/content/cedulasemoedas/pesquisabrasileirodinheiro/Apresentacao_brasileiro_relacao_dinheiro_2024.pdf. Accessed on: Dec. 27, 2024.

EUROPEAN CENTRAL BANK. Study on the payment attitudes of consumers in the euro area (SPACE) – 2024. Frankfurt, 2024. Available at: https://www.ecb.europa.eu/stats/ecb_surveys/space/shared/pdf/ecb.space2024~19d46f0f17.en.pdf. Accessed on: Dec. 27, 2024.