Banking in Brazil

The Brazilian banking system is a strong one, and is different from other Latin American Banking systems in one distinct way—the biggest banks are locally owned and operated. In many Latin American countries, foreign banks have the biggest footprint among financial institutions.

There are a few reasons for the strength of local banks, but the main reason is that Brazil is a huge country! The country is only 10% smaller than the continental US in terms of land, so for a bank to establish a presence throughout the country, they would have to cover a massive area. It’s easy for a foreign bank to have locations all over a small Latin American country, but much more difficult in a country the size of Brazil.

Not only are locally owned banks strong, but the array of banking services offered in Brazil is far more advanced than even the United States banking system. For example, at many ATM machines in Brazil, customers can transfer funds to other accounts at various banks, pay bills, and even print out full statements and blank checks.

Many ATM machines also allow customers to withdraw foreign currency while in Brazil. Much of the credit for the advanced banking system in Brazil is given to the Central Bank of Brazil, created in 1963 to regulate banking affairs in the country.

Historically, Brazilians have been much more likely to use cash to carry out transactions than anything else. However, the use of bank cards, both credit cards and debit cards, is increasing. Only about half of Brazilians have a bank account, surprising with such a strong banking system. Many employers pay their employees with cards that can be swiped through ATM machines to dispense the full cash value of the paycheck.

Currently, Brazil has the third largest number of ATM machine of any country, behind the United States and Japan. It is estimated that there are approximately 160,000 ATM machines operating in Brazil. The widespread availability of ATM machines makes Brazil a relatively easy country to send money to using ATM machines to access the funds being sent. While it could be hard to find an agent of a money transfer company, finding an ATM machine in Brazil is easy.

One interesting study showed that Brazilians are less likely to remit money home than citizens of other South American countries. About 25% of Brazilians remit money to Brazil at least once a month, with the majority of Brazilians sending money less frequently, and more for special occasions than for ongoing support of family members at home.

What’s more, many of the remittances sent to Brazil are not intended for loved ones at all, but rather are earmarked to be used by the wage earner living abroad upon return to Brazil, or are being sent home to pay off debts. It is common to see Brazilians send money home to loved ones if they have children living there, but otherwise remittances to Brazil seem to be fairly rare compared to many of its South American neighbors.