# Portugal

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Nearly two in three businesses in Portugal are sole traders or equivalents and 19 out of 20 businesses have less than 10 employees. There were 188,846 new businesses started in Portugal in 2017.

### FINDINGS

• Proportion of businesses that are sole traders or equivalents: 63.16% (2016)
• Proportion of businesses with less than 10 employees: 95.23% (2016)
• Proportion of businesses with less than 250 employees: 99.90% (2016)
• Proportion of businesses with less than EUR 5 million in revenue: 99.86% (2017)
• Number of enterprise openings in 2017: 188,846

### RESEARCH STRATEGY

The information for this research was derived from the Statistics Portugal and OECD websites. Calculations for the statistics have been shown below.

As the data obtained from Statistics Portugal and OECD websites are not shareable, we have provided screenshots of the data we obtained from these websites. Screenshots of the data of the OECD excel file (Fig 6) from which we extracted the percentages of businesses with less than 10 employees and less than 250 employees have also been provided. The screenshot document contains all the statistical data obtained from these databases.

Number of enterprises with zero employees: 532,838
Total number of active enterprises: 843,693
Therefore, the proportion of businesses that are sole traders or equivalents: 63.16% (532,838/ 843,693)

### Proportion of businesses with less than EUR million in revenue

Statistics Portugal classifies large firms (grande empresa) as those with over EUR 50 million in revenue or over 250+ employees. There are 1,144 large firms in Portugal. While this includes firms with over 250 employees that have revenues of less than EUR 50 million, we have assumed that they are a relatively small portion of the total number of large firms.

Number of businesses with revenue of EUR 50 million or more: 1,144
Total number of active enterprises: 843,693
Therefore, the proportion of enterprises with less than EUR 5 million in revenue: 99.86% (1- (1,144/843,693))

Even if the number of firms with over 250 employees and revenues less than EUR 50 million is significant, they make a marginal difference to the proportion of firms with revenues under \$50 million.
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## Co-Working Space: Portugal

Now Beato, Porto i/o, and Idea Spaces are three examples of major co-working spaces providers in Portugal with at least three locations in the country, specifically in the city of Lisbon and its neighborhoods. Precompiled lists published by credible media outlets in the country such as Be Portugal and the Portugalist featured listings of the top co-working spaces in Portugal. Provided below are summaries on each of the major co-working spaces and their locations.

### NOW BEATO (NO OFFICE WORK)

NOW Beato — “No Office Work” has three locations in Portugal and welcomes all individuals including freelancers, employees, young startup founders, students, entrepreneurs, and artists. The spaces feature several amenities such as shops, cafes, studios, lots of coffee, among other amenities. Below are summaries on the three locations.

NOW_ PORTO
• Now_Porto is located at Bairro do Amial, and features a 1,000 square meters of lounge spaces, meeting spaces, auditoriums, open spaces, studios, and coffee shops.
NOW_ BEATO
NOW_ COWORKLISBOA

### PORTO I/O

The Porto i/o brand prides itself in co-working spaces in three different locations in Porto. The company's spaces open and close at 10 am and 6 pm, respectively and run from Monday to Friday and goes for €12.50 per day and €130 per month. Below are summaries on the three locations.

PORTO I/O SEASIDE
PORTO I/O DOWNTOWN
PORTO I/O RIVERSIDE

### IDEA SPACES

IDEA SPACES is another major co-working space in Portugal. It has three locations in Palacio Sotto Mayor, Parque das Nações, and another space in Saldanha set to open soon. The company also offers four main plans, private offices, virtual offices, coworkers, and membership plans. Idea Spaces members can access and use any of the three spaces. Below are summaries on the three locations.

IDEA — PALÁCIO SOTTO MAYOR
• Ideas — Palacio Sotto mayor is a 2,500 square meters co-working space located in the Lisbon city center. The facility boasts a wide range of amenities, including but not limited to coffee-shop, meeting rooms, a large auditorium for events, phone booths, etc.
IDEA — PARQUE DAS NAÇÕES
• IDEA Parque das Nações is located in the city of Lisbon. It features 2,000 square meters of office space and offers 360º of natural light and panoramic views. The space includes two floors with event spaces, common spaces, meeting areas, reception services, print point space, cafeteria, etc.
IDEA — SALDANHA

### RESEARCH METHODOLOGY

Precompiled lists of the top co-working spaces in Portugal helped to identify major co-working spaces providers in the country, following the assumption that 'Major' is defined by a co-working space provider with three or more locations in Portugal. By looking at the examples provided in the lists by Be Portugal and Portugalist, we managed to establish that Idea Spaces, Porto i/o, and Now Beato as three examples that meet the criteria that define 'Major.' Unfortunately, none of the reports examined featured precompiled lists of co-working space providers in Portugal, focusing on those with more than three locations. That specific information on branches was either mentioned in the precompiled lists found and further confirmed by visiting the links to the respective websites.

Therefore, to determine the number of co-working space providers with multiple locations in Portugal, we had to search for that information through several sources. First, we began by looking at precompiled lists with listings of the major co-working spaces based on their popularity or size, or service offerings. These lists featured many examples but did not categorize them based on their number of locations. Hence, the listings despite providing an estimate of the number of co-working spaces in Portugal, they failed to define them based on their number of locations.

Next, we decided to explore industry reports published by credible market research companies that focus on the region as well as reputable business and news vendors with a global reach. In this regard, we checked various reports on co-working spaces published by trusted market research and business and news providers such as Forbes, Euromonitor, Deloitte, PR Newswire, CB Insights, Bloomberg, Markets and Markets, among others, but still, failed to find relevant examples. These reports focused on the co-working space market in Portugal in general, as opposed to providing finer details regarding the number of locations a given co-working space provider has. We opted to check for this information in these reports since they often provide comprehensive information about a given topic; thus, we assumed they could as well feature details on major co-working space providers in Portugal.

Third, we decided to explore the individual websites of the co-working spaces listed in the precompiled reports we examined to check whether they contain additional locations on their websites. For most of the companies, we found out that they have one location in Portugal, with only a few boasting at least two spaces. Of all the companies we examined, only those presented above featured three locations, with notifications on their websites regarding upcoming spaces (Ideas Saldanha). Using this approach, we did not yield relevant results to provide a rough estimate of the number of major co-working space providers (i.e., companies that have multiple co-working space locations) in Portugal.

Overall, based on the exhaustive searches conducted across various resources online and that cover the co-working space market in Portugal, we believe that very few co-working spaces in the country have three or more co-working space locations. Equally, since some companies have promised to open others soon, it is hoped that in the future, there will be more co-working space providers in Portugal with more than three locations. Meanwhile, existing data shows that Now Beato, Porto i/o, and Idea Spaces have at least three co-working space location in Portugal.
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## Registering a New Company: Portugal

Starting a new business in Portugal is easy based on the high ratings that the country received from World Bank's Doing Business 2019. The encouragement from the government who provides startup program initiatives also makes the business environment easy and attractive for startups.

### PROCESS/PROCEDURE:

• In establishing a new business, foreign investors must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities.
• Registering a business in Portugal in general may take one to two days to complete and there are two ways to register a business. First is "On the Spot Firm" (Empresa na Hora) which may take an hour and the second option is "Online company setting up" (Empresa Online) which may take one to two days.
• The government website of Portugal has an online portal for business setup.
• The cost of registering a business is €360.
• This is needed to open a bank account and have a Bank Identification Number which may take one day to process.
• Registering with the Social Security is necessary and may take two days to complete.
• Getting worker's accident insurance at private insurers is also needed and non-compliance would lead to fines amounting to €3,264 up to €19,380. This process may also take one day to complete.
• It is also necessary to register the company's employees with the Labor Compensation Funds which is done online and may take less than a day to complete.
• It may take around six days to complete starting a new business in Portugal.

### EASE OF PROCESS COMPARED TO OTHER REGIONS

• The overall rank of Portugal in DB 2019 is 34 with 76.55 out of a score of 100.
• According to World Bank's Doing Business 2019, Portugal ranks 57 and has an ease of starting a business score of 90.89 just below the regional average of 91.89 for OECD high income countries.
• UK ranks 19 with ease of starting a business with a score of 94.58 and France is ranked 30 with 93.27 both out ranking Portugal.
• Spain and Germany are below Portugal in terms of ease of starting a business.

• According to a report by StartupBlink, Portugal is among the top 25 countries for government startup initiatives.
• This means that business startups in Portugal are receiving support from government making it a good and encouraging ecosystem for starting a business.
• Coface rated Portugal with A2 rating which means that the political and economic situation is good and stable with efficient business environment.
• Coface also rated Portugal's business climate with A2 meaning that there is low risk for businesses to thrive.
• Weaknesses found for Portugal includes small manufacturing industry, high levels of public and private debt, inflexible labor market, youth unemployment at 25%, slow-functioning legal system and poor quality of bank portfolios.

### Opening a Business Banking Account in Portugal

• A registration fee of €360 is needed to open a bank account and have a Bank Identification Number which may take one day to process.
• Banks in Portugal that offer business accounts include BPI, Santander and Millennium.
• According to FlyAwayU, it took them three days to finally have an official business account in Portugal.

### Challenges:

• To have the business activity certificate, the business bank account is needed and they are giving only 15 days to comply and 5 days to deposit the share capital.
• Opening a business bank account is more complicated compared to opening a personal account and lots of documentation are needed.
• The person opening the business account must show up in person.
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## FinTech Climate: Portugal

The climate in Portugal has become more conducive for businesses and investors hoping to enter the country's fintech sector. Portugal's economic recovery, talent pool, proximity to other fintech hubs, and English proficiency have helped the country become one of the emerging European fintech hubs to watch. The success and growth of several fintech startups in the country serve as a testament to the growing adoption and positive reception of fintech among consumers and businesses.

### FRIENDLINESS TO FINTECH

• Recent news about Portugal's fintech sector points to the country's friendliness to fintech companies or startups.
• Portugal's fintech sector is burgeoning, thanks to the country's excellent education and research and development institutions. Portugal's innovation output is the 32nd best in the world, according to the Global Innovation Index.
• Several other factors have made the country more conducive to fintech development. The country's economic recovery, for one, has resulted in renewed confidence among investors.
• Other fintech hubs in Europe, such as those in Berlin and London, have become crowded as well, making Portugal a great alternative.
• Investors are finding Portugal's entrepreneurial ecosystem impressive because the country has plenty of talent, the country has cultural and geographical proximity to other hubs in the region, and the country has high English proficiency. Portugal has the 19th highest English proficiency among countries where English is a second language.
• Internationalization has become such a trend that foreign financial institutions, particularly large ones, have started opening technology or support centers in Portugal. Among these institutions were Natixis, Euronext, Crédit Agricole, and BNP Paribas. Conversely, Portuguese fintech companies have started expanding to the United States.
• Portugal FinLab, a communication channel between Portuguese financial authorities and entrepreneurs, was recently launched to increase the country's potential as a fintech hub. It was the result of the joint efforts of Portugal Fintech Association and financial regulators ASF, CMVM, and Banco de Portugal. Regulators use the channel to provide guidelines to submitted fintech projects.
• Portugal also has Associação FinTech e InsurTech Portugal (AFIP), a non-profit association promoting the growth of the fintech sector in the country.

• Portugal is not among the ten emerging fintech hubs in Europe that the recent Global Fintech Hub Report has identified, so the fintech ecosystem in Portugal may not be as prominent as those in Barcelona, Frankfurt, Warsaw, Moscow, Geneva, Milan, Brussels, Vilnius, Saint Petersburg, and Istanbul.
• Lisbon, Portugal, however, was recognized in a Forbes article as one of the emerging fintech hubs in Europe.
• There are several successful fintech startups that are either headquartered in Portugal or have offices in Portugal, and they include Feedzai, Loqr, Apiax, PPL Crowdfunding, Raize, and Seedrs
• Valued at \$575 million, Feedzai is the 21st most valued fintech startup in Europe.

### RECEPTION OF FINTECH

• Consumers and businesses' reception of fintech appears mostly positive considering the success of several fintech startups in the country.
• For example, Raize, a peer-to-peer lending fintech startup that has transformed how small and medium-sized businesses get funding, was the first company to do an initial public offering (IPO) in Portugal in recent years. The last time an IPO took place in the country was in 2014. Raize's IPO attracted more than 1,400 investors.
• ComparaJá, a Lisbon-based startup offering a free, online financial product comparison platform, was able to triple its revenues in just a few years' time. ComparaJá was founded no more than four years ago, yet its platform has now become Portugal's leading comparison website.

### AREAS FOR IMPROVEMENT

• When fintech startups in Portugal were asked about the aspects of the ecosystem that they wish will be improved, the biggest areas for improvement that emerged were regulation (38%), player cooperation (33%), marketing mentality (25%), and access to market (4%).
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## FinTech Companies: Portugal

DefinedCrowd and Jscrambler are two fintech companies in Portugal that have received a Series funding while Seeders, Loqr, Hold, and Betmarkets are four additional fintech companies in Portugal that have received undisclosed funding in 2018 or 2019.

### DEFINEDCROWD

• DefinedCrowd offers an intelligent data infrastructure for AI that provides high-quality training data to help machine learning-oriented products reach the market quicker and with better quality.
• The company's R&D office is located in Lisbon, Portugal
• DefinedCrowd received a Series A funding of \$11.8 million in 2018.

### SEEDERS

• Seeders provide an online platform for investors to invest in the equity of startups and other growth companies in Europe.
• The company is located in Lisbon, Portugal
• Seeders received undisclosed funding in 2018.

### LOQR

• Loqr provides a centralized customer-centric mobile-first one-stop-shop to manage the complete lifecycle of a digital identity.
• The company is located in Braga, Portugal.
• Loqr received €71.4K (\$79,254) in funding in 2019.

### HOLD

• Hold platform provides users with unique peer-to-peer lending and borrowing capabilities, allowing users to use their existing crypto-asset holdings for instant cash advances.
• The company is located in Porto, Portugal.
• Hold received undisclosed funding in 2019.

### BETMARKETS

• Betmarkets is a web platform that allows customers to invest in sports betting by copying sports betting experts.
• The company is located in Porto, Portugal.
• Betmarkets received undisclosed funding in 2019.

### RESEARCH STRATEGY

We have provided 6 fintech startups that have received funding in 2018 or 2019. To provide the requested information, we began by combing through market reports and trends in the fintech industry in Portugal, using this strategy, we were able to find reports by Accenture, Deloitte and Portugal Fintech on the fintech landscape in Portugal. We then searched through over 122 startups mentioned in the various reports for startups that have received funding in 2018 or 2019. We could only find 2 startups that have received a Series funding and 4 startups that have received other type of funding within the same period. Other fintech companies found haven't received any funding or received funding before 2018.

We then moved on to find trending news articles from the fintech industry in Portugal where we were hoping to find a list of successful fintech startups. We scanned through multiple national and international fintech industry news like PortugalNews, Fintech News, Lexology, Mondaq, IBS Intelligence, Bloomberg. The startups mentioned in the news articles were the same as the ones profiled in the Portugal Fintech Reports.

Next, we combed through company and business databases like Crunchbase, Angel List, ZoomInfo, Dealroom, Craft.co, Tracxn, among others. Using the advanced search options on the databases, we searched for fintech companies in Portugal, filtering the results to only include companies that have received funding in 2018 or 2019. We also used the databases to locate the funding rounds, the fintech companies have received but for some companies, it was indicated that they have received funding within the period but the amount wasn't disclosed. The companies found in the databases are the same with the ones profiled in the reports and we have provided information on the startups on the "Key Findings" section of our research.

The following conversion metrics have been used to convert the monetary amounts from Euro to US Dollar (wherever applicable): 1 Euro = 1.11 US Dollar.
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## Digital Services Trends: Portugal

Alternative financing, machine learning in banking, data analytics for insurers, digital payments, and API integration are some trends in digital services that are offered to businesses in Finland. The following details delve deeper into each of the trends detailing what they involve, the companies at the forefront of such trends, as well as reasons why they are considered trends.

### Alternative Financing (Crowdfunding)

• According to the Country Crowdfunding Factsheet for Portugal, as published in 2018 by the European Crowdfunding Network, the face of crowdfunding in Portugal is fast-changing with new players entering the market seeking to provide services to businesses.
• Crowdfunding is a digital trend that will shape the fintech industry over the next few years. According to a report by Statista, crowdfunding is the largest segment in the alternative financing which is expected to grow at a CAGR of 8.3% between 2019 and 2023.
• Apiax is one of the companies at the forefront of providing alternative digital financing services. Apiax has a cutting-edge technology that provides full visibility and control over digital regulatory rules and empowers financial institutions to serve their clients more efficiently and in a fully compliant manner.
• PPL crowdfunding has an online platform that gathers networks of investors and supporters. The service has helped many businesses in Portugal to raise funds for their operations and expansion.

### Digital Payments

• According to Leonor Machado, the General Manager at Caixa Geral de Depósitos, digital payments have become popular in recent years and is shaping the financial services sector.
• He says that "In Portugal, use of electronic payment instruments (cards, direct debits, and credit transfers) has grown significantly in recent years."
• The trend was also highlighted in the Portugal fintech report in 2018.
• The report notes that IfthenPay is a banking institution of payment in Portugal. In 2017, the company moved approximately €312 million of payments. Businesses utilize the service for interbank transfers and also peer-to-peer transactions.
• According to the report, businesses in Portugal are expected to indulge more in digital payments services in the coming years.

### API Integration

• According to a 2018 Portugal fintech report, API integration in service provision has gained much popularity, especially with the growing number of complicated transaction in the financial services sector.
• API integration is useful to business in making their financial management infrastructure efficient.
• The switch provides a single platform through which businesses can get access to multiple payment channels and industry stakeholders through API integration.
• Businesses make use of the platform to aggregate transaction information from multiple sources into one consolidated data structure, facilitating value-added processes like analytics and dynamic routing among others.
• API is a trend because, as the report notes, many startups are coming up to offer such services to businesses.

### Machine Learning in Banking (Robo-Advisors)

• The application of machine learning in banking is a trend in Portugal, with major banks already prepared to grab the opportunity that comes with it. It involves the use of "robo-advisors."
• Recently, Banco Best launched the first robo-advisor solution in Portugal in partnership with DWS.
• According to an industry forecast by Statistica, the number of consumers using robo-advisors is expected to increase significantly by 2023.
• James is an artificial intelligence portal based in Portugal, which helps financial institutions make faster and better credit decisions by allowing the use of machine learning at an enterprise level.
• Machine learning is an everlasting trend as it provides such an innovative service which unlocks new opportunities for businesses. Through the robo-advisors, for instance, businesses can make better financial decisions.

### Insurtech: Data Analytics for Insurers

• Insurers are exploring digital options that enable better service delivery to businesses. Bog data and analytics are part of the services that are trending.
• In a study conducted by the IDC, in cooperation with Infosistema in 2017 on the "Digital Transformation of the Insurance Companies in Portugal," the majority of respondents consider mobility, big data, and business analytics technologies decisive solutions to the insurance sector’s digital transformation over the next 5 years.
• Habit is one of the companies at the forefront of insurtech. It is a data analytics platform that accesses real-time data from IoT devices, smartphones, and contextual data to offer behavioral profiling of insurance customers and allows insurers to offer new products, and services.

### Research Strategy

To compile the digital services trends offered to businesses in Portugal, we reviewed top industry publications and reports (such as Portugal Fintech Report 2018) and utilized expert opinions (such as from Leonor Machado, the General Manager at Caixa Geral de Depósitos) and insights to gather the trends. We were keen to only include such trends that are mostly discussed by experts and thought leaders in the industry, as well as the ones that were most featured in top industry publications and reports.
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### OVERVIEW OF PORTUGAL

• The population of Portugal is 10.3 million.
• As of December 2018, consumer spending in Portugal reached €29,848,900,000.
• Portugal’s mobile commerce market is worth €0.43 billion, which is around 10% of all e-commerce transactions in the country.

### MEANS OF PAYMENT IN PORTUGAL

• Cards are the most popular online payment method in Portugal and hold approximately 40% of the market share.
• 10% of all completed e-commerce transactions are from digital wallets, and 7% come from bank transfers.
• In Portugal, 55% use Multibanco for payment, 45% use PayPal, and 1% use Apple Pay.

### GOOGLE PAY USE IN PORTUGAL

• According to SIBS Market Report, in Portugal, 1% of the population use Google Pay, which has a 9% awareness score.
• Android Pay and Google Wallet recently became Google Pay in February 2018.
• In a survey conducted by SIBS, only 3% of the respondents said were confident in using Google for payment.
• According to Datanyze, there are 2,024 websites added from the past month using Google Pay technology.
• The market share of Google Pay in Portugal according to Datanyze is around 0.01%.

### RESEARCH STRATEGY

After extensive searches through credible finance resources, we could not find data about the number of Google pay users in Portugal, Google Pay payments by value and volume, and the number of merchants accepting Google Pay in Portugal. However, based on our research, Google Pay is not widely used in Portugal, and we have provided helpful findings regarding the market in general.

First, we looked for precompiled statistics by searching for country reports and surveys on the use of Google Pay in Portugal. We searched in industry websites and research giving websites such as McKinsey, JP Morgan, etc. We also broaden our search by covering other payment methods in Portugal. We also searched in Portugal based websites and websites in Portuguese language. We found payment means in Portugal and found out that Google Pay is not widely used and only has 1% utilization in e-commerce in the nation. Unfortunately, we could not find data on the number of users, volume of payments, the value of the payments, and the number of merchants using Google Pay.

Second, we tried looking for data from tools such as SimilarWeb, Sensor Tower, and Datanyze. We hoped that from these tools, we could get insights on the traffic or number of downloads of Google Pay in Portugal. Unfortunately, SimilarWeb and Sensor Tower do not have the data we need. Datanyze, on the other hand, provided us with the number of websites that added Google Pay technology for the past month in Portugal. It also gave us the market share of Google Pay in Portugal based on the websites using the technology.

Third, we tried to triangulate the data by looking for data points. We searched in reports and country insights for Portugal. We found consumer spending, e-commerce value, and percentage of transactions. Unfortunately, the data points found are not enough to accurately calculate the number of users, volume of payments, and value of payments in the country as a whole.

Fourth, we searched for payment industry reports that are regional or global in scope. We hope to find overviews that pertain to Portugal's payment system, especially digital/online. We were able to find reports that may have the data we needed, but details are under paywall (see sources 6 and seven as examples)

The lack of data on Google Pay use in Portugal could be because the service was recently launched in the nation. Reports also show that Google pay is not widely used in the country. Third, fewer studies may have been conducted since this method is not the primary means of payment in Portugal. To summarize, statistics specific to Google Pay usage are not publicly available yet; though, we found some helpful findings on Google Pay use in Portugal, which are covered in the findings section.
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## Apple Pay Statistics: Portugal

After thorough research, we were unable to determine how Apple Pay is widely used in Portugal. However, we were able to determine that Apple Pay was launched in Portugal in 2019 and it is primarily supported by digital banks such as Revolut.

• Apple Pay in Portugal works with Visa and MasterCard accounts and at the moment only one traditional Portuguese bank, Crédito Agrícola, processes Apple Pay transactions.
• However, Apple Pay in Portugal is available for digital banks costumers, such Revolut or Monese and there are possibilities of most Portuguese banks partnering with Apple Pay in the future.
• Apple rolled out Apple Pay services in "Portugal and Slovakia with financial backing from several large European banks including Monese and N26" in 2019.
• Digital banks that support Apple Pay in Portugal include Monese, N26, and Revolut.

### Research Strategy:

We began the research to determine how Apple Pay is widely used in Portugal by scanning through financial publications in a bid to unearth details as regards the statistics for the subject under investigation. We were able to obtain a report by McKinsey that detailed data regarding mobile apps used in payment. We were able to establish that more than 30 percent of global digital commerce volume in 2017was done through such financial mobile apps. However, we were not able to obtain any relevant data specific to the subject under investigation.

Next we searched for any local reports specific to the financial and banking market in Portugal. We were able to obtain a report by MacRummors that detailed that Apple Pay was recently launched in Portugal in July 2019. Unfortunately, the report did not provide any specific related to the subject under investigation. Another report by BePortugal detailed that Apple Pay only work with Visa and MasterCard account holders in Portugal as well as the fact that the transactions are only made possible through digital banks. Unfortunately, the reports did not provide any specifics related to the subject under investigation.

As a last resort, we tried using image search for any graphical data as well as business statistics specific to the subject under investigation. We were able to obtain data of trade volumes for mobile payments but the statistics were also not specific to the subject under investigation.

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## Digital Banking: Portugal

Banking institutions in Portugal have been slow to offer digital banking services. The uptake of digital banking services from the population lags behind that of its European counterparts. Notwithstanding this, there has been significant growth in this area with the rate of uptake increasing in recent years.

### DIGITAL BANKING IN PORTUGAL

• In 2005, the number of people using digital banking services in Portugal was approximately 8% of the population.
• The percentage of people using digital banking services has consistently risen in recent years. In 2018, 39% of the population in Portugal were using digital banking services.
• The Instituto Nacional de Estatistica of Portugal found that 52% of Portuguese aged 16-74 are enrolled to use digital banking services. Not all those enrolled consistently use the services.
• Although this figure had risen from the previous year, it is still behind the European average. 84% of all Europeans are enrolled to use digital banking services.
• In the 3 months before the survey of the Instituto Nacional de Estatistica, 37% of the Portuguese had used e-commerce. Of this group, 79% had ordered from Portuguese businesses.
• There has been a rise in the number of digital banks and digital banking services in Portugal in recent years.
• Seven percent of Europeans are clients of a digital bank only. The uptake in Portugal is below this average.

### BANKING IN PORTUGAL

• Investment in digital banks in Portugal has been slow compared to global counterparts.
• In 2014, four of the five major banks in Portugal had total losses of over EUR534.4 million. None of these banks have subsequently adopted Fintech projects.
• There is no motivation among the big banks in Portugal to innovate and transform the banking industry. There is no emphasis on providing comprehensive digital banking services.
• The primary focus of the major banks in Portugal at the moment is operational efficiency and cost reduction, not digital banking services.
• One international trend in 2016 was traditional financial institutions responding to the threat to their core business by Fintech companies by partnering up with them.
• Portugal financial institutions did not follow this international trend.
• Portugal banks have been reluctant to adopt the trend towards digitization.
• ActivoBank is one of the few Portuguese banks to embrace digital technology. They saw 1,000 customers enroll in their digital banking service in the first 2 months it was offered.
• They have found there is a high expectation among the customers for digital banking services. However, this demand is not currently being met in Portugal.
• Fintech companies in Portugal have developed a range of innovative digital banking platforms and systems that have had good uptake and been received favorably by a range of European banks. The uptake of this technology in Portugal has been poor.
• Portugal has seen growth in the Fintech startup market in recent years. The market shows potential but still lags behind European counterparts.

### PAYMENT HABITS IN PORTUGAL

• Portugal has been slow to move from traditional means of payment to digital payments.
• In 2018, the public administration finally moved from paying pensions by check to paying through digital banking.
• Consumers predominantly use traditional means to pay for goods and services. This includes cash, check, credit, and debit cards.
• As a result of consumers continuing to use traditional means of payment, the uptake in digital banking by businesses has been slow.

### ACCESS DIGITAL BANKING SERVICES

• Some banks have offered mobile digital banking services, and the uptake has been positive. Overall the reluctance of the major players to offer digital services has seen Portuguese access to digital banking services fall behind that of the general European population.
• Multibanco is one of the few banks to offer the ability to withdraw cash through a mobile phone. This service is offered at over 12,000 of its ATMs in Portugal.
• The Multibanco mobile platform includes the ability to send money via an SMS. Users are required to register and download the MY WAY App.
• \$943 million worth of transactions have been made through mobile wallets in Portugal in 2019.
• There are expected to be 1 million mobile wallet users in Portugal by 2023. Currently, there are 700,000 users.
• This is 7.2% of the population.
• In 2017, 31.2% of these users were aged 25-34 years of age. 26.2% were aged 35-44 years of age.
• Those on high incomes are more likely to use mobile wallets. 50.2% of mobile wallet users were on high incomes.
• Fifty-two percent of those who accessed the internet in the previous 3 months had used it for digital banking. There is no indication of whether they access digital banking services at home or work.
• Around 650,000 Portuguese, used a mobile banking app between January and May 2019. This accounts for 7.6% of the population.

### RESEARCH STRATEGY

We extensively searched a range of industry publications, articles, and blogs to determine who was using digital banking services in Portugal. We expanded our search to various government reports and databases to obtain statistics in respect of the usage. We considered a range of banking publications and expert opinion in respect of the current state of the banking industry in Portugal and whether there has been growth in the provision of digital banking services. To ascertain the number of digital banking startups, we searched a range of industry publications, including those in the FinTech sector. Finally, we considered how people were accessing digital banking services. We searched a range of databases and articles specific to mobile banking apps to determine the usage rates.

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## Digital Banking By Industry: Portugal

• In 2017, the number of POS terminals grew by 6% to 319,900 while the number of ATMs decreased by 3% which was mainly due to the result of 8.3% reduction in branches year-on-year.
• About 5.9% of the card purchases in 2017 were reported of online purchases only.
• According to the Portuguese Banking Sector report, there are about 4,326 bank branches and 284,600 POS in Portugal.
• BNI Europa, a digital bank in Portugal offers different brands such as Puzzle, which is the first fully-digitalised disbursement process, credit consolidation and has a special credit card with installment payments at point-of-sale.
• Banco BNI Europa is a Portuguese digital-only bank that aims to challenge the traditional banking sector through strategic partnerships with fast-moving fintech businesses to launch new products allowing the use of the most advanced technology in terms of risk analysis, consumer experience and rapid entry into the market.
• Since Europe is beginning to mandate e-invoicing in some countries, Portugal is also developing in this sense.
• The B2B payments system in Portugal has seen a stabilization of cash and check payments while the B2C market has seen an evolution of electronic payments, with the consequent reduction in the weight of traditional banking.

### Research Strategy:

• We began by looking for information in banking industry reports from Portugal such as the Portugal like (APB) Associacao Portuguesa de Bancos in order to determine the top industries that use the digital business banking services in Portugal. This strategy was not fruitful as the sources only provided an overview of the banking sector in Portugal and there was no information on business digital banking.
• We also tried to locate traditional banks that offer both traditional and digital banking services to derive at industries that have had the highest uptake of digital business banking services in Portugal with respect to digital-only banking. We found that some of the traditional banks in Portugal include banks like Caixa, Banco Comercial Portugues, Banco Santander also offer digital banking services. However, details on client segmentation was not published in the public domain.
• We tried to identify the top industries in the Portugal from sources like World Atlas. We thought that the biggest industries were most likely to use digital banking services. As such, we tried to find information on the adoption of digital business banking services in those sectors through various reports and publications such as Mckinsey, Deloitte, BPortugal, and CorporateFinanceInstitute. Unfortunately, those sources mostly focused on the digitization of the respective industries, with no specific information about digital banking.
• As a final resort, we looked for European banking reports on digital business banking services on sites such as European Banking Federation. We wanted to find the highest uptake of digital business banking services in the European region. Unfortunately, we only found information on how banks have adopted digital banking and statistics on banking services but there were no insights into how digital business banking services are used by businesses in this region.
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Part
11

## Challenger Digital Banks: Portugal

The top three challenger digital banks that offer banking service to businesses in Portugal are N26, Revolut, and Monese, however, we could not find their market penetration in the country. Below are the helpful findings and a detailed methodology on the topic.

### N26

• Market Penetration: In 24 European markets, N26 has over 2.5 million customers who generate over €2 billion per month through transactions.
• N26 was founded in 2013 by Maximilian Tayenthal and Valentin Stalf. In early 2015, they launched the first product.
• In July 2019, Mobile Bank N26 entered the US market for the first time. It is subsidiary, N26 Inc., is located in New York.
• Freelancers and self-employed individuals can earn 0.1% cashback on all purchases and enjoy free card payments globally when they open/use N26 business bank account. The account is free.

### RESEARCH STRATEGY

We commenced the research by first looking for pre-compiled data on the top challenger digital banks that offer banking services to businesses in Portugal. We leveraged a compilation of industry reports, leading publications, and expert blogs to select and present information on 3 top challenger digital banks that offer banking services to businesses in Portugal. We went through sources such as Portugalist, Learn Bonds, Sifted, Penser, among others. Through this strategy, we could gather a list of the 3 challenger digital banks and then cross-referenced their service offerings for businesses in their respective websites. However, we could not identify the top challenger banks in terms of market penetration and the percentage of all businesses in Portugal these digital banks serve. We implemented the following strategies in search of the missing information:

We began our search by going through the respective websites of the selected banks. We checked their press releases in search of the information, however, we could not find any list nor a percentage of their business customers in Portugal. Data related to their business market is presented in general (worldwide information/data), while the data related specifically to each country (in this case Portugal) is not disclosed on their individual websites.

Next, we searched through corporate online databases that help in finding business information about the private and public companies on websites such as crunchbase, hoovers, zoominfo, among others. However, most of the data found on these websites only include their funding, investors, estimated revenue, competitors, team members, and support service. We could not find any market penetration of the selected banks on these sources.

Lastly, we went through survey and consumer reports hoping to find any profile analysis detailing the number of business consumers these digital banking serve. Our primary focus was to find pre-compiled information specifically to market penetration of these digital banks. However, most of the articles and surveys we could find only have information relating to account opening process, products and services offered, security measures, fees and charges, customer support, the security of deposit, and foreign exchange conversion rates, among others these banks offer. Also, most of the articles also tackles the pros and cons of each digital bank, but no information on the market penetration of these banks.

NOTE: From the above strategies, we could not find the percentage of businesses in Portugal these digital banks serve. The information on the businesses these banks serve has been provided in general, this is, worldwide, but not specific to a country.

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Part
12

## English Usage: Portugal

In Portugal, English is widely used as a second language, with the percentage of people in the country who speak the language varying from nearly 14% to nearly 60% depending on the source. The use of the language is prevalent in both business and media, as can be observed from the pervasiveness of English-language radio channels, print publications, advertisements, and discourses. The media and the social networks are among the factors that motivate people in the country to use English.

### USE OF ENGLISH

• English is spoken widely across Portugal. According to LanguageKnowledge.eu, of the people in Portugal, 14.87% speak English as their first or second language, 1.27% speak English as their first language, and 13.6% speak English as a second language.
• In Portugal, English is the fourth most common first language after Portuguese (95.06%), Estonian (1.89%), and Czech (1.83%).
• In Portugal, English is the most common second language.
• Of people aged 15-34 in Portugal, 26.06% speak English as a second language.
• Of people aged 35-54 in Portugal, 12.48% speak English as a second language.
• Of people aged 55+ in Portugal, 3.47% speak English as a second language.
• In Portugal, English is the most common second language among people aged 15-34 and people aged 35-54. English is only the third most common second language among people aged 55+ after French (6.27%) and Spanish (3.69%).
• Portugal ranks 19th among 88 countries as far as English proficiency is concerned.
• Portugal ranks 16th among 32 European countries in terms of English proficiency.
• An article published by Diário de Notícias, however, pegs the percentage of the people in Portugal who speak English at a much higher rate. According to this article, 59.6% of the Portuguese in the country speak English as a foreign language. English is followed by French and Spanish, with 21.5% and 14.8% of the Portuguese speaking these foreign languages, respectively.

### ENGLISH IN BUSINESS AND MEDIA

• In Portugal, English is a commonly used language in business. It can be safely assumed that "most Portuguese business contacts speak some English."
• However, it is considered a polite practice in Portugal to inquire before a business meeting if an interpreter is needed.
• According to a study published in the International Journal of Society, Culture, and Language, English is "the second language of most public and private domains influencing [Portugal's] culture and discourses."
• The media and the social networks are among the factors that encourage people in Portugal to use English.
• In Portugal, people seeking English-language radio channels and print publications have several options to choose from.
• On the radio, people can turn to BBC World Service on digital FM 90.2, Voice of America on shortwave, and KISS FM on 95 FM (Lisbon) and 95.8 FM or 102.1 FM (Algarve), for example.
• Portugal has several English-language print news outlets as well. Among these news outlets are The Portugal News, a weekly newspaper, Algarve Daily News, a news site, The Algarve Resident, a weekly newspaper, and Essential Portugal, a bi-monthly magazine for the expatriate community.
• As can be seen on the Ads of the World website, some ads in Portugal are in the English language.
Sources
Sources

##### Quotes
• "Medium business: A company employing less than 250 people and whose annual turnover is not exceeds EUR 50 million or the total annual balance sheet does not exceed EUR 43 million and is not classified as micro or small business"
• "Large company: Company that employs 250 or more people, or whose turnover is higher 50 million euros and net assets of over 43 million euros."
##### Quotes
• "The Online Company legal regime allows the incorporation, by electronic means, of limited liability companies, sole proprietorships and limited liability companies. It also allows for the creation of a company with the firm approval request and with the automatically approved firm. "
• "Companies Online may not be incorporated by companies whose capital is made up of contributions in kind which require more solemnity than the written form for the transfer of assets with which members enter the company. In addition to these, European limited companies are also excluded. "
##### Quotes
• "A business bank account is necessary when relocating or opening your company in Portugal — not only for obvious reasons but for bureaucratic ones, too. To get the start of activity certificate (which you will need when opening your Portuguese business), for instance, you must provide the details of your business bank account. Failure to do so might lead to paying penalties, and the deadline is tight: only 15 days from the date of incorporating the company to the start of activity declaration and only five days to deposit the share capital. "
##### Quotes
• "A report by global startup ecosystem mapping group StartupBlink shows that Portugal is among the top 25 countries for government startup initiatives out of 125 countries."
• "According to a tweet by StartupBlink, Portugal is likely to rise in the rankings "because of a supportive environment.""
• ""StartUP Portugal is [the] Portuguese government's strategy for encouraging entrepreneurship focusing on developing the current startup ecosystem, funding opportunities and internationalization. "
##### Quotes
• "The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average."
• "The business environment is good. When available, corporate financial information is reliable. Debt collection is reasonably efficient. Institutions generally perform efficiently. Intercompany transactions usually run smoothly in the relatively stable environment rated A2."
##### Quotes
• "Portugal’s economic recovery and pro-business policies continue to make it an attractive market for investment."
• "There are no legal restrictions in Portugal on foreign investment. To establish a new business, foreign investors must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities. There are no nationality requirements and no limitations on the repatriation of profits or dividends."