The legal currency in Brazil is the real and, as a rule, all obligations enforceable in Brazil must be denominated in local currency. The real as hard currency is accepted in all establishments and for the fulfilment of all cash obligations enforceable in Brazil.
Payments in Brazil, although denominated in local currency, may be executed by a few methods:
- Wire transfers: all wire transfers between bank accounts are operated by the financial institutions of the transferor and the transferee. Brazil has a sound and secure payments system – the Brazilian Payments System (SPB) – which includes all entities, systems and procedures for processing and settlement of transactions involving transfer of funds, foreign currency, financial assets, or securities. Wire transfers may be processed in real time or within two days, depending on the volume of funds being transferred and the transfer system selected by the transferor.
- Debit, credit and stored value cards: payment instruments are increasingly the most accepted and used payment instrument in Brazil. Refer to Section III.ii, below, for further information on the payment instruments' industry.
- Cheques: cheques are instruments of credit similar to promissory notes and governed by a specific legal regime. Given the level of fraud that occurred with cheques in the 1990s their acceptance is now very restricted.
- Direct debits: a very popular payment method in Brazil. By granting specific and express authorisation to the financial institution, the consumer may allow the automatic debit of the amounts due to a certain third party from its account.
- Boletos: a second very popular payment method in Brazil. Such instruments – issued by banks or other institutions accredited to provide such services – allow the payment to third parties by individuals that do not have access to essential financial services or, in other words, do not have bank or payments accounts.
The payments industry has an important role in the Brazilian economy as the acceptance of payment instruments in the wholesale market increased significantly over the last decade. In view of the growing volume of transactions using payment instruments and given their importance as tools for financial inclusion, in 2013 the federal government enacted Law 12,685 (the e-Payments Law).
The e-Payments Law provides the legal framework for 'payment arrangements' (i.e., the set of rules governing a payment scheme, such as credit or debit card transactions) and 'payment agents' (i.e., any agent that issues a payment instrument or acquirers a merchant for payment acceptance), which became part of the SPB and subject to oversight by the Central Bank. In spite of being regulated by the Central Bank, payment agents are not deemed to be financial institutions and are prohibited from engaging in activities that are exclusive to financial institutions. The e-Payments Law brought within the scope of the CMN and the Central Bank supervision the entire market of credit, debt and pre-paid cards that were not previously regulated by them (unless issued by a financial institution) until then.
Following the sway of the e-Payments Law, the CMN and the Central Bank enacted a set of rules on payment arrangements and payment agents, which became effective in May 2014.
This set of rules encompasses, among others:
- consumer protection and anti-money laundering compliance and loss prevention rules that should be followed by all entities supervised by the Central Bank when acting as payment agents and payment arrangers;
- the procedures for incorporation, organisation, authorisation and operation of payment agents, as well as for the transfer of control, subject to the Central Bank's prior approval;
- definition of arrangements excluded from the SPB;
- payment accounts, which are broken down into prepaid and post-paid accounts; and
- a liquidity requirement for prepaid accounts by which their balance must be allocated to a special account at the Central Bank or else invested in government bonds, starting at a lower rate and rising gradually to the total account balance (according to a specific timeline).
Following discussions with market players and industry representatives, the Central Bank has been adjusting and improving the regulations over time mainly to include operational and non-discriminatory tools to foster competition in the payments market. The most recent update to the regulation is dated January 2017.