Amazon Launches Debut Credit Card in Brazil to Expand Fintech Reach

Amazon, the U.S. retail giant, has made its foray into Brazil’s fintech landscape by unveiling its first credit card in the country, further solidifying its presence in Latin America’s largest economy and bolstering its e-commerce footprint, writes David Feliba for Fintech Nexus News. 

The company’s latest move involves the introduction of two Mastercard credit cards this week. One of these cards is exclusively targeted at Amazon Prime users, while the second one is accessible to non-members as well. Amazon’s strategy centers around enticing cashback rewards and an innovative Buy Now Pay Later (BNPL) feature.

Cardholders of Amazon’s credit card can accumulate points through both on-platform and off-platform purchases. Cashback rewards are a significant draw, with some cases offering rewards as high as 5%. These earned points can later be redeemed for discounts on future online purchases within Amazon’s marketplace.

According to Daniel Manzini, Amazon’s Country Manager for Brazil, «These benefits are best in class in Brazil, and they are permanent.»

In just the initial days following its launch, over 14,000 cards were issued, as reported by Brazilian media. To facilitate this credit card venture, Amazon joined forces with Bradescard, a card issuer owned by Banco Bradesco, one of the country’s largest private banks.

This credit card introduction expands Amazon’s range of payment options in Brazil, which already include traditional credit cards, Pix, and bank slips. The company’s objective, as stated in a press release, is to offer a comprehensive payment experience alongside an ever-growing array of rewards choices. Amazon had previously collaborated with J.P. Morgan Chase for a similar credit card venture in the United States.

This strategic move by Amazon comes as it faces off against Mercado Libre, often referred to as the «Amazon of Latin America.» Despite Amazon’s dominant market position in the United States, it has encountered robust rivalry from its Buenos Aires-based counterpart south of the border.

Mercado Libre has established a substantial foothold in the fintech sector, boasting a customer base of over 45 million active users in the region. While Amazon’s credit card introduction is new in the Brazilian market, the concept itself is not foreign to the broader market.

Competitors like Mercado Libre already offer credit options for online purchases. However, loans provided by e-commerce platforms have yet to gain significant traction. In its recent report, Mercado Libre disclosed a credit portfolio of $3.3 billion in the region, marking a 21% year-over-year increase. Despite this growth, it still represents a small fraction of Brazil’s vast loan market.

To capture customers’ attention, Amazon’s card in Brazil highlights its BNPL feature. Cardholders have the flexibility to pay for purchases exceeding 1,500 Brazilian reais (approximately 300 U.S. dollars) in up to 15 interest-free installments. Moreover, these credit cards do not come with annual fees.

The card’s launch coincides with a period of declining interest rates, which provides a favorable environment for credit expansion. Brazil’s central bank recently reduced its benchmark rate following an aggressive hiking cycle.

As interest rates decrease, experts anticipate an improvement in the financial well-being of Brazilian households, despite previous concerns about rising delinquencies. Bradesco’s executives indicated stabilization in delinquency rates as of the second quarter of 2023. CEO Otávio de Lázari mentioned that the country is entering the final stages of the delinquency cycle during the latest earnings call.