The news: TikTok wants to establish a banking and payments presence in Brazil, per Reuters.

The platform is seeking approval for licenses from Brazil’s central bank to operate as an “electronic money issuer” and as a “direct credit company.” 

This would let TikTok facilitate P2P payments between TikTok users, ecommerce transactions, and offer lending products backed by its own capital or through other lenders.

How we got here: Major social media platforms are chasing super app status. 

• TikTok already debuted Douyin Pay in China for the Chinese version of its product to compete directly with incumbent fintechs Alipay and WeChat Pay.
• Stateside, Elon Musk’s X is preparing to launch X Money this month, which will include stock trading, crypto, Visa-backed P2P, deposits, and a cash-back debit card. 
• And Meta launched one-click checkout, shoppable ads on Facebook, powered by Stripe, to drive Meta Pay adoption.

Why this matters: Targeting Brazil for its financial services push likely stems from the country’s low barrier to entry for payments. 

Thirty-five percent of Latin American adults are unbanked, and another 42% are underbanked, per Boston Consulting Group, making the region ripe for fintechs to acquire new customers. And the popularity of Pix has made most Brazilians extremely familiar with the technology and the benefits of digital payments. We forecast that by 2029, 69.7% of Brazil’s population will be digital banking users.

Implications for fintechs: There’s a valuable opportunity in Brazil for fintechs as the Brazilian populace shifts to digital payments, but the market is saturating. 

New fintechs will need to stand out from the pack by offering competitive incentives for sign-ups and using social ecosystems to gain loyal users, especially when local merchants incentivize payments through Pix for lower fees.