The Brazilian payments landscape : Regulation, recent developments, and challenges
Abstract
This paper explores the evolution of the Brazilian retail payments market, focusing on the regulatory framework, recent developments and emerging trends. Prior to 2013, the legal mandate of the Central Bank of Brazil (BCB) as regards payment service providers (PSPs) was limited to financial institutions. However, the implementation of Law no. 12,865/2013 brought powers to regulate, supervise and oversee not only payment schemes and their managers, but also payment institutions (ie non-financial firms offering payment services). Key initiatives in this realm include the development of Pix, an instant payment scheme managed by BCB, and the Open Finance ecosystem, which, among other features, facilitates payments through standardised application programming interfaces. This paper discusses how the BCB’s innovation agenda aims to boost efficiency, promote competition and deepen financial inclusion. It highlights the significant shift from cash and cheques towards electronic payment instruments, driven by the expansion of card acceptance and innovations like Pix. It also describes how the market has been further transformed by the entry of non-financial PSPs and the expansion of digital wallets. The paper concludes that while substantial progress has been made, there are still challenges to address, such as high interchange fees and the need for further digital and financial inclusion. The future of the Brazilian payments market is expected to be increasingly digital, with continued regulatory efforts and market innovations driving further advancements. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Breno Lobo is Deputy Head of the Competition and Financial Market Structure Department at the Central Bank of Brazil, where he has spent 18 years working in the area of payment systems. He was project manager for the implementation of Pix, the Brazilian instant payment scheme. He is currently the team leader responsible for the management and operation of Pix, contributing to its evolving agenda and operational procedures.
Ricardo Mourão is the Head of the Department of Competition and Financial Market Structure at the Central Bank of Brazil. His responsibilities include the regulation of financial market infrastructures and payment schemes. Prior to this, he was Chief of Staff for the Deputy Governor for Licensing and Resolution. He also worked for 15 years in the Payments Systems Department, where he was Head of the Payment Systems Division and, later, Senior Advisor to the Head of the Department.
Angelo Duarte is Chief of Staff for the Office of the Deputy Governor for Licensing and Resolution at the Central Bank of Brazil. Prior to this, he was Head of the Competition and Financial Market Structure Department, having worked at the Central Bank of Brazil since 1998. He has also worked at the Ministry of Finance in Brazil and was a visiting economist at the Bank for International Settlements between 2013 and 2016. He holds a PhD in economics from the Graduate School of Economics at Fundação Getulio Vargas.
