Voice of the Industry

Brazilian payment regulation: why some providers had to stop processing Boletos

Thursday 7 February 2019 09:31 CET | Voice of the industry

Several ecommerce merchants and institutional providers have approached allpago over the last few weeks asking about the Brazilian payment regulation and why it`s no longer possible for them to transact with customers in Brazil using the popular Boleto Bancário post-payment service.

Legislation introduced by the Central Bank of Brazil in 2016 to regulate the growing number of cross-border transactions created a new set of rules for providers facilitating payments with companies based overseas. The full details of this are available in the Central Bank’s Circular number 3691 as amended.

Article 132 of Circular 3691 sets forth that international payment facilitators can only accept payments from customers acquiring goods and services through their platforms using debit and credit cards issued in the name of the acquiring client, or through wire transfers coming from the acquiring client.

The logic of the rule is to have a clear identification of the origin of the funds and, consequently, avoid money laundering. The rule was issued based in the old Boleto rules whereby identification of the payer was not possible. Notwithstanding this fact, some international payment facilitators took a more aggressive interpretation of the rule and accepted Boletos.

More recently, the Central Bank has (allegedly) informed the market that Boletos would not be allowed for payment facilitators. Some providers have withdrawn Boletos as a payment option from their services as a consequence.

allpago, which uses a different legal structure to allow the use of Boletos, was unaffected by these enforcement measures. This means that ecommerce merchants and institutional providers based outside of Brazil can still accept payment by Boletos by connecting to allpago’s payment gateway.

Additional rules around the registration of Boletos in Brazil

The rules introduced by the Brazilian Central Bank in 2016 are not the only ones to have affected the use of Boletos in Brazil. The Brazilian Federation of Banks (FEBREBAN) introduced a compulsory registration scheme for Boletos on 14 February 2017 as part of efforts to reduce fraud and boost payment rates.

Following a phased introduction of the new scheme throughout 2017, Boletos now need to be registered by the issuer with the Brazilian Central Bank at the point they are created. Previously, the Central Bank may only have become aware of the Boleto at the point at which it was presented for clearing.

While this may seem like a small change, its impact is significant, providing the Central Bank and Boleto issuers with more information about Boletos in circulation, and giving customers a much greater amount of flexibility around how and when they use their Boletos.

The introduction of these new rules did work entirely in the customers favor. When registering new Boletos with the Central Bank became mandatory, many Boleto issuers in Brazil began applying a charge for doing so.

allpago’s payment platform is connected directly to the API and central billing system used to administer Boletos. It has always registered new Boletos created through allpago directly with the Central Bank itself. Unlike other issuers, allpago only charges for clearing Boletos - it does not apply a fee for creating and registering them.

This article explains and clarifies the panorama of the Brazilian payment regulation, how the Central Bank takes control of it and why international providers are not longer able to transact with customers using the Boleto Bancário post-payment service.

Bruno Balduccini was invited to contribute exclusively on the legal aspects of this article and not regarding allpago’s compliance performance.

About Philipp Bock

Philipp Bock is the Chief Executive Officer & Founder of allpago, the leading payment service provider for Latin America. allpago enables e-commerce merchants and payment providers to accept all relevant local payment methods through a single platform and API covering more than 90% of the Latin American market. Before founding allpago, Philipp was Managing Director and responsible for the turn-around of the Brazilian subsidiary of arvato services (Bertelsmann AG) in São Paulo. philipp.bock@allpago.com / +49 (30) 6098 7982

About Bruno Balduccini

Bruno Balduccini has been a partner at Pinheiro Neto Advogados since 2001 and is based in the firm’s São Paulo office. His fields of expertise are banking regulations, business law, corporate law, financing,investments, M&A, exchange controls, credit cards, insurance and reinsurance, fintechs and cryptocurrencies. Balduccini has been a Standing Member of the São Paulo Lawyers Institute, of the Banking Law Committee at the OAB (Brazilian Bar Association), and of the Financial Committee of the Brazilian Institute of Business Law. bbalduccini@pn.com.br / +55 11 3247 8681

About allpago

allpago allpago is the leading payment service provider for Latin America, enabling ecommerce merchants and payment providers to accept all relevant local payment methods through a single platform and API covering more than 90% of the market. allpago’s state-of-the-art technology and regulatory knowledge are trusted by merchants including Adobe, BMW, McAfee, Microsoft, Nintendo, Salesforce, Symantec and institutional payment providers including ACI, Wirecard or Zuora to maximize conversion rates and ensure a compliant payment operation in Latin America. allpago is the only Latin American payment provider to feature in Gartner’s global Market Guide for Digital Payment Gateways and Payment Service Providers 2018. allpago is headquartered in Berlin with regional offices in Bogota, Buenos Aires, Lima, Mexico City, São Paulo, San Francisco and Santiago de Chile.

About Pinheiro Neto Advogados

Pinheiro Neto Advogados is a Brazilian office, independent, full service, specialised in multidisciplinary operations and able to translate the Brazilian legal environment for the benefit of its national and international clients. It was one of the first firms in Brazil to prospect foreign clients and specialise in business law. As the Brazilian industry developed and the economy became more sophisticated, the national client portfolio expanded and now accounts for approximately half of our customers. Pinheiro Neto Advogados is the Brazilian institutional partner of the GLEE (Globalisation, Advocates, and Emerging Economies) study, conducted by the Center for Professional Studies of the Harvard Law School. Pinheiro Neto Advogados is a Brazilian partner in the research and technological innovation project for the legal area jointly developed by Thomson Reuters and Samsung with only a few firms worldwide.

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Keywords: Brazil, allpago, payment regulation, ecommerce, merchant, debit card, credit card, payment providers, cross-border transactions, post-payment service, Boleto Bancario, Central Bank of Brazil, Philipp Bock, Bruno Balduccini, Pinheiro Neto Advogados
Countries: World

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