Huge losses to Brazil’s tourism sector and rising unemployment caused by COVID-19 will fundamentally change the payments landscape, says GlobalData, a leading data and analytics company.

Brazil will see a rise in bank account penetration and increased usage of digital channels. This allows previously unbanked consumers to receive financial aid and avoid cash, which could transmit the virus and infect the customers.

The Brazilian tourism sector has already lost US$1.0bn as of March 2020, according to the Brazilian Tour Operations Association. Reduced tourists’ spending will have a significant impact on the payments sector.

Ravi Sharma, Payments Analyst at GlobalData, comments: “The pandemic is likely to make Brazilian consumers more comfortable with digital channels. The introduction of BR Code payments and new instant payments later this year will further drive growth in overall electronic payments.”

GlobalData forecasts the CAGR of ATM cash withdrawals to be 1.5% up to 2023; this is only a very small decline on the 2.0% forecast before COVID-19. This stands out from almost all other countries, where there has been significant reductions in post-COVID-19 forecasts, with cash withdrawals almost unanimously forecast to witness negative growth. However, online spending is also expected to increase at a strong rate up to 2023.

Sharma concludes: “Online spending is also likely to surge as wary consumers are staying home and using online channels to purchase goods. To avoids public contact and due to fears of shortages, consumers are increasingly opting for online channels on order to purchase daily essentials.”