Digital-first financial institutions have become key drivers behind cards’ sustained presence and growth in rising economies, according to new data revealed by EBANX, the global payment service provider (PSP).
Fintech and digital players now account for 41 per cent of the total value transacted through credit cards for online purchases in Brazil, reveals EBANX, which has processed transactions for nearly 70 per cent of Brazil’s credit cardholders.
This trend is gaining traction in other countries in Latin America, mainly Colombia (21 per cent) and Argentina (19 per cent), where digital banking expansion and intense fintech activity are pushing card issuance.
“This is a clear indication of how the fast and massive adoption of alternative payment channels by consumers in emerging countries is also influencing the credit card industry in these regions,” explained João Del Valle, co-founder and CEO of EBANX. “E-wallets and other real-time payments like Pix in Brazil, and PSE in Colombia, have raised the bar and driven innovation across all segments, including credit cards. These digital solutions have pushed traditional payment methods to evolve and adapt to meet modern consumer expectations.”
EBANX says that fintech and neobanks’ key contributions to the credit card market include user-friendly platforms, reward programmes, and enhanced customer experiences that have reshaped how consumers engage with card payments. Through this, many fintechs now have a similar reach to the major traditional banks in emerging markets such as Brazil.
In Brazil, the user base jumped from 25 million individuals to 100 million in three years, according to the Central Bank of Brazil.
Four out of 10 of these people are credit card holders. One effect of this trend is the growth in credit card usage in digital commerce across emerging markets, with a projected annual increase of 13 per cent through 2027, according to the latest edition of Beyond Borders, EBANX’s annual study on the digital market and payment trends in emerging economies.
Consumers emerge on top
Incumbent banks also appear to be following in the footsteps of digital-first financial institutions – with many also investing in innovations to enhance the online purchasing experience in rising economies.
Ultimately, consumers emerge as the largest beneficiaries, gaining access to more straightforward and secure checkout systems, such as click-to-pay technology, which reduces the number of clicks needed to complete a purchase, improving convenience and efficiency.
“In today’s dynamic payments landscape, the focus isn’t on opposing Pix or e-wallets to cards or choosing between traditional and new payment methods,” adds Del Valle. “Instead, it’s about expanding opportunities and creating an ecosystem where different payment solutions can coexist and complement each other, ultimately providing consumers with more choices and better experiences in their digital transactions.”
EBANX also says that network tokenisation stands out as another prime example, as it replaces sensitive card data with encrypted identifiers for each transaction, reducing fraud risk without compromising approval rates.
The technology lowers fraud-related declines and enhances the overall quality of transactions. In tests conducted by EBANX in Brazil, network tokens reduced the decline of transactions by more than 86 per cent due to card security issues. Meanwhile, the adoption of network tokens led to an increase of up to seven percentage points in overall approval rates for online retail merchants and up to five percentage points for subscription-based merchants.
Will debit card growth wane?
While credit cards account for approximately 80 per cent of online purchases in emerging markets, according to data from Payments and Commerce Market Intelligence (PCMI) in Beyond Borders, debit cards have become an important avenue for attracting new online customers in countries like Peru, Mexico, and South Africa.
In markets where access to credit is more restricted, financial inclusion has catapulted the usage of debit cards, which are linked to existing account balances, and brought new consumers into e-commerce.
Peru exemplifies this pattern, where EBANX found that 60 per cent of first-time online shoppers use debit cards. In Mexico, this figure reaches 55 per cent. Unsurprisingly, in these two countries, debit cards account for a larger share of online transaction volume than credit cards, at 49 per cent compared to 27 per cent in Peru and 38 per cent versus 31 per cent in Mexico.
“However, it’s worth noting that this share will likely decrease in some key economies from emerging markets such as Brazil and Colombia, as alternative payment methods mature in these countries,” concluded Del Valle.
In Brazil, where Pix holds 40 per cent of the online sales volume, debit cards now account for only one per cent of digital commerce transaction value.
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