Brazil retail groups in healthcare, consumer goods and agribusiness are creating their own “digital banks” to offer customers digital accounts, payment services, prepaid credit cards, among others, in search of greater loyalty and revenue generation.
The last two examples were from one of the largest gas station chains and a large alcoholic beverage group, whose payment platforms were authorized by the Brazilian Central Bank (BACEN) to offer digital accounts and other services to their consumers.
BACEN regulations have revolutionized the banking sector in recent years, allowing non-banking economic groups (pharmacy chains, household appliance store chains, among others) to add financial products and services to strengthen the relationship with customers.
In order to offer these services and products, non-financial organizations must set up and license the fintech types “Payment Institution (IP)” and “Direct Lending Company” (Sociedade de Crédito Direto – SCD) with BACEN.
See below 5 key points about the creation of “digital banks” by business groups:
1. What “Digital Banking” services can Payment Institutions (IPs) offer? Created by Federal Law 12.865/2013 and regulated by BACEN Regulation 80/2021, IPs can: (i) offer digital account to customers, (ii) issue electronic money to pay or transfer funds from the digital account , (iii) be an issuer of a postpaid payment instrument (credit card), (iv) acquirer in a payment arrangement, (v) initiator of a payment transaction and (vi) offer currency exchange service (without physical exchange of currencies).
2. IPs must obtain authorization from BACEN to operate? Yes. IPs must request authorization from BACEN to operate as (i) electronic money issuer (including digital account), (ii) payment transaction initiator and (iii) currency exchange operator.
3. What is the minimum equity of IPs? BACEN regulation requires that IPs must pay in and maintain a minimum capital of (i) BR$2 million to offer a digital account to customers, issue electronic money to pay or transfer funds from the digital account, and issue postpaid payment instrument, and acquirer in payment arrangement, and (ii) BR$1 million for payment transaction initiator.
4. What “Digital Bank” services can Direct Lending Companies (Sociedades de Crédito Direto – SCD) offer? Created by BACEN in 2018, SCDs can (i) grant loans, financing and carry out the acquisition of receivables, (ii) issue electronic money and postpaid payment instruments (credit cards), (iii) represent insurance, (iv) analyze and collect credits from third parties, among others.
Unlike banks, SCDs cannot open a deposit account or current account and take deposits from the general public. This type of fintech must finance its operations with its own resources.
5. Do SCDs require BACEN authorization to operate? SCD is a type of fintech that requires prior authorization from BACEN to operate. It is constituted as a corporation (S/A) and requires a minimum capital of R$1 million.
If “every company will be a fintech”, retailers and wholesalers of agro, health, consumer goods, among others, should carefully evaluate the creation of their own “digital banks” to approach and consolidate the relationship with their customers.
