Services such as maintenance fee-free account, issuance of slips and Pix for companies at no cost, offered today by fintechs for those who are MEI (Individual Microentrepreneur)may cease to be free if a proposed regulatory change under study by the central bank proceed without changes.
The draft resolution, released by the BC in October 2021 for public consultation, establishes a ceiling of 0.5% in the interchange fee for transactions carried out with prepaid cards (issued by fintechs). The project takes shape after the same limit was stipulated by the municipality in 2018 in relation to debit cards (issued by banks).
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The new proposal also includes the application of the maximum limit of 0.5% for all transactions involving corporate cards and non-face-to-face purchases in both arrangements. With no exceptions, the BC says it seeks to “simplify the monitoring of compliance and the surveillance and supervision action itself”.
The interchange fee is the percentage paid by card acquirers to issuers (financial institutions) and the range practiced today in transactions with prepaid cards varies from 1.1% to 1.5%, on average.
This remuneration is one of the main revenues of fintechs, so a significant reduction could make the business model of a portion of financial startups unfeasible.
Normative proposal threatens company
Among them is Cora, which has been operating as a digital bank for SMEs (small and medium-sized companies) since 2020 and has around 500,000 customers. According to Mônica Leite, leader of the Legal and Compliance area, the company’s sustainability would be threatened if the regulatory proposal is not modified.
“Perhaps we will find ourselves facing a trade off. To what extent can we offer the same services for free if there is a considerable reduction in revenue that is represented by the interchange fee,” he said.
“We may have to review our strategies and start charging for some services, this can have a flight effect [de clientes]”, he added.
The crisis caused by the Covid-19 pandemic pushed many Brazilians towards entrepreneurship and, since then, the number of MEIs continues to grow. The modality is responsible for 57.4% of active businesses in Brazil, in addition to representing 79% of companies listed in the first four months of this year.
Individual entrepreneur, who has a special tax regime, is among the consumers who would be affected by the new rules.
According to a survey carried out by Zetta, an organization that brings together fintechs such as Nubank and Mercado Pago, customers of member financial institutions (more than 90 million accounts) would have saved around BRL 24 billion in fees if the new regulation on the interchange fee was in effect last year.
“From the point of view of financial inclusion, by our estimates, in the next two years, 34 million people would have to start paying tariffs or end up being excluded from the financial sector”, said Bruno Magrani, president of Zetta.
To arrive at these numbers, the survey used as a premise a ceiling of 0.6% for the interchange fee and was based on the literature review carried out by Raphael Bruce, an associate researcher at Insper at the time.
One of the empirical evidence brought by the author shed light on the impact of regulation of the interchange fee practiced in the United States, highlighting how the result, unlike the intention, can be negative for consumers and merchants.
The researchers observed that the adjustment of rates by US banks, after the Durbin amendment, fell more than proportionally on the most vulnerable, leading to unbanking.
“It has second-order consequences that reverberate in the economy and that are very important and need to be taken into account”, said Bruce to Folha de S.Paulo.
According to him, the impact on micro-entrepreneurs is a topic to be considered in the debate. “By regulating the interchange fee, the financial institution will try to compensate for this loss in some way, this can fall on the individual behind this MEI, it can fall on MEI-type accounts. It is uncertain where the financial institution’s response will be”.
This analysis was taken by Zetta to the president of BC, Roberto Campos Neto, in a meeting on June 2nd.
The BC has maintained an intense dialogue with the market and received several complementary studies on the subject after the public consultation period, which ended in November last year. At the time, 23 contributions were submitted from industry associations, card-issuing institutions, acquirers and set up providers.
“The BC’s technical areas continue to analyze the contributions and work on the normative proposal, which will soon be submitted to the collegiate board”, said the autarchy.
The draft resolution presented to market agents is still under study and should undergo changes in its final version.
When it launched the public consultation, the BC said that the proposal had the objective of “harmonizing rules, costs and procedures associated with payment instruments that present great similarity from the point of view of the operation of the payment service provided, with the objective of bringing more efficiency to the payments ecosystem, in line with the BC# Agenda in the Competitiveness pillar.”
Fintechs argue that, despite their similar use, debit and prepaid cards are different products from a technical-legal point of view.
“Banks can use the amounts that are in a deposit account to lend these funds, while the amounts that are deposited in a prepaid payment account cannot be used for leverage purposes,” said Mônica Leite, from Cora.
Febraban (Brazilian Federation of Banks), in turn, understands that, even if the products are not technically similar, the consumer is not able to distinguish the differences and supports the new resolution. “If the nature of the service is the same, therefore, it has to have the same rules”, said the director of Innovation and Services, Leandro Vilain.
In the entity’s assessment, the proposal to establish the same percentage limit for interchange fees in debit and prepaid card transactions is an advance in terms of regulatory symmetry, with a more isonomic treatment between agents.
“What we defend in the first instance is that there is no type of tariff regulation. Price regulation in any sector is bad for the economy, it creates distortions over time. But once it has been done, let this rule at least be valid for all participants who have similar services, Vilain said.
For Abecs (Brazilian Association of Credit Card and Services Companies), the improvement needs that arose after the BC stipulated a 0.5% ceiling on the interchange fee for debit cards must be carried out by the private sector.
“We express to the Central Bank that we are against any type of tabulation. We believe in a liberal, open economy and we understand that the market is able to adjust. If there is any imperfection, the market has to adjust itself”, said Ricardo de Barros Vieira, executive vice president.
“Being done by the market, regulation tends to be less harmful to one or another participant, one fintech or another, one incumbent or another,” he added.
If the regulation under study by the BC is approved, Zetta asked the autarchy to consider that the reduction in the interchange fee be made in a staggered way so that fintechs have time to adapt.
“Banks only had six months to adapt when there was a limitation on the debit card, we have been asking for longer terms, from 12 to 24 months. The shorter the period, the greater the impact,” Magrani said.
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