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The 9th iteration of this �鶹�� Evidence Lab survey assessed the key trends in the payments industry, capturing the effects of repricing efforts and changes in the competitive landscape during 2022. �鶹�� Evidence Lab surveyed 465 Brazilian merchants across the country during September 2022. The objective of the survey was to assess the key trends in the payments industry. The sample was composed of 65% small businesses (up to 9 employees), 24% medium-sized (10-29 employees); the survey showed that merchant discount rates (MDRs) trends reversed, with rates going up after 6 years of sequential contraction (likely reflecting higher funding costs) while prepayment penetration increased during the year but expectation for future rates increase are mixed.

1. Card penetration reached record levels, while cash usage decreased with QR Code gaining more relevance;
2. Inflection point on cards' MDRs (increased after years of compression, likely due to repricing);��
3. Fewer merchants working exclusively with smaller players; more merchants purchased POS (but less intention to acquire in the future);��
4. Slightly lower payments in installments but higher prepayment penetration; mixed feelings on future fees;��
5. Banks’ distribution channel regained relevance (now ranked as the most important channel, ahead of acquirers’);��
6. Higher digital account penetration in acquirers;
7. Credit appetite from acquirers seems limited (with almost no increase in number of merchants that received a loan offering from acquirers) and conditions were not better than from the banks; and��
8. QR Codes acceptance reached record levels while incentives may increase.��

The majority of merchants are likely to use new technologies in the next six months (51%), and the main reasons are to keep up with market changes (37% of answers) and ease/security (26%). Only 2% of merchants believe the main reason to use new technologies is because it is cheaper, suggesting that new technologies may not be as cheap compared to other means of payments, and/or merchants still don't know the exact price charged.

To understand the MDR trend, �鶹�� Evidence Lab asked merchants how much they paid as a percentage of sales for credit and debit card transactions. The portion of merchants that are unaware about the exact rates being charged increased to 34% (from 10% in Oct-21), which might be related to price increases implemented by the acquirers. Companies have been stating that they made adjustments throughout theyear. According to �鶹�� Evidence Lab data, gross credit MDR decreased sequentially from 3.7% in Jan-16 to 2.1% in Oct-21, and as of Sep-22 the trend has reversed, with credit MDR increasing significantly to 2.8%. The gross debit MDR also increased to 1.6% in Sep-22 from 1.3% in Oct-21. We believe this trend reflects all the repricing movements seen in the payments industry during the year, mainly motivated by higher funding costs (Selic rate at 13.75% in 2022YE, vs. 9.25% in 2021YE).
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