RIO DE JANEIRO, BRAZIL – Brazil’s central bank on Friday announced stricter rules for fintechs, noting that payment institutions are now subject to regulations based on their size and complexity, and also increased standards for required capital.
The new framework is set to take effect in January 2023 and be fully implemented in January 2025.
The measure is expected to affect companies such as Nubank, payments company PagSeguro, financial technology solutions company StoneCo, and digital wallet PicPay.
The calculation of regulatory capital will now exclude assets that are of little or no value to the operations of payment institutions, the central bank said, ensuring that companies can better absorb unexpected losses.
The changes, which the sector has been waiting for since opening a public consultation on the issue in late 2020, will facilitate the entry of new competitors into the payments sector “to increase competition in the system and financial inclusion,” the issuer said.
Traditional banks in Brazil urged the regulator to align rules for highly successful fintechs, saying many of these companies have grown at a breakneck pace despite lax regulations.
The central bank believes the new rules are necessary as payment institutions have diversified and evolved since 2013, when they came under its supervision, paving the way for the burgeoning industry of new financial startups that use technology to facilitate payments, remittances and credit.
“In this process, part of the segment established financial subsidiaries and began to take new risks without meeting corresponding regulatory requirements,” the bank said.