The Brazilian government is striving to keep pace with the mobile revolution, on Monday publishing a decree facilitating and regulating mobile and electronic payments.
The decree, MP 615, aims to set out basic guidelines for telecommunications entities offering mobile and electronic payment services in the country – an issue that has been a major roadblock to business and competition in the past. It also calls upon the Central Bank, National Monetary Council, Ministry of Communications and Anatel to stimulate financial inclusion by way of participation in the telecom sector in providing payment services.
Inclusion, in fact, is one of the major objectives of this initiative. Latin Americans are notoriously under-served when it comes to access to banking services, with 70% of the region’s population unbanked. In Brazil, 39.5% of people ages 18 and over don’t have bank accounts. Mobile penetration, however, is extremely high. Providing Brazilian citizens with more mobile and electronic options for finances, in turn, is a highly viable solution.
It is also the expectation that facilitating and regulating mobile and electronic payments will bring down banking services costs. This will counter often high prices for banking and credit transactions – a consequence that hasn’t exactly been well received by banking entities that stand to lose out on profits.
Until very recently, 94 out of 100 transactions with credit and debit cards in Brazil were channeled into two acquirers. Now, broadband internet and mobile devices are dramatically changing this payment landscape and leveling the playing field. So, if supported through systematic changes such as standardization and competition, this regulation could provide some flexibility for innovation to thrive. Ultimately, firms will innovate on their own and hopefully drive this payment revolution in the country.
Action in the mobile payment sector has been on the Brazilian government’s agenda for quite some time. In October of last year, Central Bank president Alexandre Tombini revealed work on impending regulations. However, as Cruz pointed out, it is business that is responsible for most of the advances made thus far.
Many products, services and solutions for mobile and electronic payments have started to emerge in Brazil, remaining ahead of government policy in the technology curve.
Telefonica and MasterCard will soon launch Zuum, a mobile money service, in six Brazilian cities. Online payment service provider PagSeguro also released an m-payment product this month, and Oi has unveiled a pre-paid mobile wallet, created hand-in-hand with Cielo and Banco do Brasil.