I got another article published at Alternative Emerging Investor. Please find it below.
You may purchase this article and the full magazine at http://www.aeinvestor.com/
PAYMENT PLATFORMS IN BRAZIL
Many providers of international payment
services have been seeking to enter the Brazilian market. The companies, both big and small, operate
mainly through websites and focus on the intermediation of payments for
merchandise. Several of them also offer direct transference services,
especially between individuals.
The Brazilian market is very particular,
however, due to its high level of automation and to its very strict regulation.
Brazil has implemented quasi real time retail,
interbank and forex payments infrastructures in the form of automated clearing
houses, overseen by the Brazilian Central
Bank.
The direct participation in such clearing
houses is heavily regulated and demands investments in risk mitigation and
technical infrastructure. Brazilian Central Bank will also perform a very
detailed authorization process before allowing any company to become a
financial institution able to take part in the backbone of the Brazilian
payment system.
Smaller companies in Brazil have been able to participate
in the market by acting as Point of Sale (POS) operators, intermediating the
relationship between a highly dispersed customer base and a relatively
concentrated base of retail providers.
The scene for international payment providers,
however, remains a little opaque. A
number of companies are starting to do business in Brazil, basing their
operations in a proprietary base of clients located in one specific
country. For example, one company may
specialize in bank transferences made between a Brazilian community in Portugal
and another specific Portuguese community in São Paulo.
These
payment solution companies (PSC) might be, in effect, creating a separate,
private clearing house for their own payments. This would happen, for example,
if the PSC waited for similar order to be transmitted from one country to the
other (one person in Brazil who wants to send 100 USD to Portugal and one
person in Portugal who wants to send the same value to Brazil), and then
compensated the orders within the respective countries (by depositing the 100$
sent from Brazil directly to the bank account of the person who wanted to
receive money from Portugal, for example).
This kind
of informal clearing of deposits would be absolutely illegal, since it would be
made outside of the Brazilian payment system administered by the Central Bank.
To further
complicate things, though, one must consider that if the PSC acts exclusively
as a point of sale terminal, receiving data from credit cards and transmitting
them for clearance before officially endorsed financial institutions in Brazil,
its activities would be subject to a much less strict regulation. On the other
hand, these PSC should be prepared to aid the Brazilian sellers or consumers to
obtain proper tax documentation regarding the transaction, since the receipts
of payment generated electronically often do not contain all the details
required by Brazilian authorities.
Finally,
transactions that use virtual coins, such as Bitcoin, inter alia, are out of
the scope of regulation of the Brazilian Central Bank and therefore might
theoretically be performed by PSC companies, even if they are not registered as
or acting on behalf of financial institutions in Brazil.
The
conclusion is that the operation of foreign payment solutions web sites in
Brazil might be subject to two or three very different sets of rules, depending
on details about how the transactions are conducted. The operations must be
carefully planned in order to avoid infringement of public policy regulations.
Further regulatory development, especially regarding the use of virtual coins,
are expected to take place soon.
This article has originally been published at the sixth installment of - Alternative Emerging Investor.
To subscribe or purchase this issue, please visitwww.aeinvestor.com, or contact Ms. Tiffany Swensonat tiffany@aeinvestor.com.
To subscribe or purchase this issue, please visitwww.aeinvestor.com, or contact Ms. Tiffany Swensonat tiffany@aeinvestor.com.
