On March 26 2018, the Brazilian Central Bank enacted
amendments to the existing regulation on payment methods,
proposing more flexible rules on payment arrangements, payment
institutions and on interchange fees charged to issuers of
debit cards. The Central Bank expects these changes to foster
competition among market players and as a result provide
reduced debit card costs for end users.
Under existing Central Bank rules, interchange fees that can
be charged to issuers of prepaid and post-paid accounts (that
is, debit cards and credit cards, respectively) are treated
equally. Circular 3,887 now establishes maximum limits on
interchange fees that may be charged by merchant acquirers
(entities accountable for enabling merchants to accept payment
instruments) to issuers of prepaid accounts: (i) 0.5% for the
average of interchange fees, weighted by the amount of
transactions calculated on a quarterly basis; and, (ii) 0.8% as
a maximum percentage charged for any transaction.
This new regulation follows an international trend already
observed in several developed and developing countries. In the
US and Mexico, for instance, maximum limits for interchange
fees charged in debit cards transactions led to average cost
reductions on such fees of 40% and 50%, respectively.
The maximum thresholds provided above do not apply to
non-face-to-face transactions or to transactions carried out
with corporate cards.
Circular 3,886 introduced the regulation of sub-acquirers,
which are entities that allow the final recipient to accept the
payment instrument (for example, a credit or debit card) issued
by either a payment institution or a financial institution.
Since sub-acquirers are not considered to be settlors of
payment transactions, these entities will be only required to
connect to the centralised payment settlement system
(Câmara Interbancária de Pagamentos or
CIP) if a minimum threshold of transactions exceeding BRL500
million ($146 million) in a 12-month period is met.
Circular 3,885 established new rules for the authorisation
process with the Central Bank for payment institutions to
operate as payment services providers. Payment institutions
were subject to advance authorisation if linked to a regulated
payment arrangement, regardless of the entity's size. Under the
new rules, payment institutions are only subject to advance
authorisation to operate if they individually meet certain
thresholds: (i) executing payment transactions totalling a
minimum of BRL500 million in a 12-month period; or (ii) holding
deposits in prepaid accounts totalling a minimum of BRL50
million in average, considering the 30 largest daily balances
in a 12-month period. As soon as the payment institution
reaches any of these parameters, it must request the
authorisation within 90 days.
The Central Bank released public consultations to assess the
market's view on: (i) the establishment of governance
committees in card network entities; and (ii) rules for
converting sub-acquirers into merchant acquirers.
Similar efforts are being made towards fostering innovation
and reducing the cost of credit transactions. Regulation of
certain types of credit transactions carried out exclusively by
means of electronic lending platforms (including peer-to-peer
lending) is under review by the Central Bank, after the initial
proposal underwent public consultation.
The Central Bank's efforts to foster competition among the
various providers of payment methods, thus reducing debit card
costs for end users, fits in with the Brazilian authorities
wanting to stimulate financial inclusion through the regulation
of mobile payment tools, credit unions, equity crowdfunding and
electronic lending platforms.