O emergency aid had a huge effect on the way Brazilians deal with money: the number of people no bank account had a sharp drop in the last five months, since the benefit requires the opening of a digital social savings accessible by the Caixa Tem app. The rise in internet sales and the popularization of digital wallets also played an important role.
The number of unbanked people in Brazil fell 73% during the pandemic, according to a study by AMI (Americas Market Intelligence) in partnership with Mastercard. This includes people who had no bank or fintech account before April 2020.
There are some reasons for this decline. Social distance, a necessary measure during the COVID-19 pandemic, stimulated e-commerce in Brazil and payment by proximity in physical stores. In addition, the federal government distributed more than R $ 200 billion in emergency aid to 67.2 million people between April and September, all via digital account.
It is estimated that, in 2019, there were 45 million Brazilians unbanked – people who did not have a bank account, or who had but had not used it for more than six months. They handled more than R $ 800 billion a year.
Cash limits aid withdrawal
Banking inclusion was partly enforced by Caixa. Since May, beneficiaries of R $ 600 emergency aid have to wait several weeks before they can withdraw or transfer money. Many people then decided to use slips to send money to Nubank, PicPay, Mercado Pago, among other fintechs.
In May, less than 5% of Caixa Tem transactions were made digitally and around 35% were withdrawals. In August, digital transactions reached 63%, against 15% of withdrawals – part of which ended up being transferred to other institutions.
Other Latin American countries have also seen a drop in de-banking due to social benefits during the new coronavirus pandemic. “Ingreso Solidario in Colombia and Ingreso Familiar de Emergencia in Argentina boosted the creation of bank accounts by users to deposit the aid,” says Mastercard in a statement.
Over five months, 40 million people in Latin America have created accounts with financial institutions, according to the study. The unbanked population fell 18% in Argentina and 8% in Colombia.
The survey was conducted between June and August 2020 with “data released by governments and financial institutions, as well as interviews with 18 financial institutions, including the most traditional banks and fintechs in the four countries”.