03/03/2024 – 8:01
By taking the lead in the acquiring market with the Network, in the second quarter of last year, Itaú Unibanco solidified the success of the company's reintegration into its channels, in a strategy designed to ensure the loyalty of small and medium-sized companies to the bank. Now, Bradesco and Banco do Brasil want to try the same path with Cielo, which they intend to delist. Without belonging to traditional banks, but as the owner of a digital one, PagBank (formerly PagSeguro) believes it has an advantage in this race: it understands that it is already ahead because it was “born” in an integrated way.
“It is a positive factor, which only proves the success of our strategy. We have a big competitive advantage, because traditional competitors have two big legacies that cannot be discussed from a systemic and operational point of view”, PagBank CEO Alexandre Magnani told journalists on Wednesday, 28. “It takes work to copy this integrated model, even more so when it comes from two long-standing legacies.”
Last year, the company had recurring net profit of R$1.77 billion, the highest in history and growth of 11% on an annual basis. Result of the recovery of margins in acquiring, after a few quarters in which the digital bank's revenues were pressured by the ceiling on the interchange fee for prepaid cards, a modality in which the company was one of the largest issuers in the country.
In Magnani's view, the departure of the last remaining one of the three market leaders from the Stock Exchange does not threaten this recovery in margins. “We observed that some of these competitors alternate cycles of market gain with cycles of profitability, and consequently market loss. We don’t see unreasonable competition from them,” he said.
Market analysts consider that one of the weapons of Rede and rival Getnet, controlled by the Spanish Santander and which also left the Stock Exchange, is price reduction. Companies deny this, but banks admit that with privately held businesses, it is possible to make more flexible offers. Translating, you don't necessarily make money with the machine, but rather with the banking relationship to which it opens the doors.
Resumption
In small machines, PagBank ended 2023 with 6.5 million active customers, a drop of 8% in one year, but an increase of 3% if the so-called nano traders, who move up to R$1,000 per month, and who no longer be a priority for the company since 2022. On the step above, that of micro-entrepreneurs, who generate between R$1,000 and R$10,000, the company grew again last year.
“The economic conditions of the country have improved. In 2021 and 2022, the interest rate was growing or stable at a high level. As it began to fall, it gave us more security that these customers will return what we expect in the future”, stated the company's Vice President of Finance, Artur Schunck.
Nano and microentrepreneurs were brought to the small machines market by PagBank, which in the last decade, under the name of PagSeguro, began to offer smaller machines, rent-free and at cheaper prices, which opened up space for these merchants to start receiving card payments. It is a more profitable segment, and one that all other companies in the sector have tried to reach. The majority gave up because serving this public is expensive: the high mortality rate of businesses in Brazil means that many turn off the machine before it pays for itself to the company.
According to the company's director of Investor Relations, ESG and Market Intelligence, Eric Oliveira, the equation is more balanced. The level of activation of machines in the fourth quarter was the highest since the beginning of 2021. Furthermore, the period for each machine to pay fell, and losses due to card fraud were reduced by half. He did not detail the numbers. “The operation becomes healthier, and by becoming healthier, we become stronger and more robust to serve these entrepreneurs.”
The company expects net profit to grow by up to 21.5% this year, and processed volume to increase by up to 16%. According to Schunck, the first quarter has had a similar performance to the fourth quarter of last year, which reinforces the company's guidance. In the last quarter of 2023, the volume processed by the company's machines rose 21% year-on-year, to R$113.7 billion.
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