Friday Briefing: Fintechs in Brazil fear new rules will hurt growth

March 18, 2022

#TopStory 🔝

Fintechs in Brazil fear new rules will hurt growth

Fintechs in Brazil suffered a setback this week after the country’s central bank (BCB) issued new regulation for payment conglomerates that subjects them to the tougher, existing standards applied to financial institutions.

Under the new rules on proportionality, payment conglomerates will have to follow more stringent requirements commensurate with their risks. However, the Brazilian association ABFintechs said the changes could turn into a barrier for larger fintechs, such as Nubank and Stone.

ABFintechs President Diego Perez said fintechs that own a financial institution, however small, will be treated like a large bank in terms of risk. “The autarchy didn’t create competitive difficulties for small fintechs but did make it difficult for small ones to grow in the long term,” he tells iupana.

According to the BCB, the change is necessary due to the diversification and sophistication of the segment since the legal framework for payment companies was established in 2013.

The BCB also established three categories for conglomerates that own a fintech. According to Perez, the proportionality isn’t balanced and is tougher for conglomerates that are led by fintechs but which own a financial institution.

The Brazilian Federation of Banks (Febraban) said it views the new framework as a natural step that shows the country’s payments sector is maturing and that its growth has brought benefits in terms of competitiveness and efficiency.

The new rules take effect in January 2023 and full implementation is due by January 2025.

#Payments 💳

Apple Pay arrives in Peru amid contactless payment boom

Apple’s digital wallet began operating in Peru this week through partnerships with local banks and acquirers. Contactless payments such as those enabled by Apple Pay are evolving rapidly in the country, Melissa Pelosi, Niubiz’s financial solutions manager, told iupana. In 2019, such payments had a penetration rate of 2% to 3% and now it’s around 60%, she said. Niubiz is one of the local acquirers working with the Apple wallet.

Apple Pay also began operations in Argentina.

Baz Súperapp and CDMX seek to wean markets off cash

Mexico’s Ministry of Economic Development has signed an agreement with Banco Azteca’s digital portfolio, Baz Súperapp, that seeks to increase the use of digital payments in 70% of Mexico City’s (CDMX) public markets by the end of this year. Mexico is among the countries in the region that rely most on cash, which is something the authorities are trying to mitigate. Baz has about 3.5 million users in the city.

Aplazo launches BNPL card

Buy now, pay later fintech Aplazo unveiled its deferred virtual payment card Mastercard, in partnership with technology company Galileo. The Mexican startup says it hopes to continue competing against traditional credit cards.

The future of alternative payments

Alternative payments have become indispensable for both the unbanked population and the new generations of customers who enjoy their speed and practicality.

There are still challenges for this mode of payment, such as preventing fraud and choosing the right strategy to develop it in the context of each country, but it’s expected to continue growing by leaps and bounds in the coming years.

How will alternative payments address these challenges?

Discover all the details by downloading our White Paper, developed in partnership with SafetyPay.

#Investments 💰

Itaú Unibanco invests in Uruguayan fintechs

Brazilian banking giant Itaú Unibanco has ventured into the Uruguayan fintech sector with the acquisition of 30% of two digital financial platforms, Prex and Paigo. The deal is expected to close in the second half of 2022 and is subject to central bank approval in both countries. The companies have experienced strong growth and expect to launch new products with Itaú’s backing.

Sempli raises round from CAF, IDB and others

Sempli, a Colombian lending fintech, has closed a new funding round led y CAF and Comfama, new investors for the startup. The size of the round was not revealed, but it’s estimated to be under $20 million. Sempli has raised $42 million in total since its launch in 2017, of which $24 million came in its first years.

Kamino raises $6.1 million in pre-seed round

Brazilian fintech Kamino, which provides accounting, legal and banking assistance for startups wanting to attract international investors, raised $6.1 million in a pre-seed round led by Inspired Capital, QED Investors and Global Founders Capital, among others.

Contalink raises $2.1m in seed round

The startup, which automates accounting processes, raised $2.1 million to improve its product, expand its team and consolidate in Mexico.

The round was led by accelerators Y Combinator and 500 Global while investment funds Scribble Ventures, Kalonia and SOMA Capital also
participated.

#Acquisition  💸

Advent International boosts stake in Prisma

The U.S. investment fund acquired 49% of Argentina’s Prisma Group for US$350 million, after buying 51% for $680 million in 2019. Advent now owns the Banelco ATM network and the Pagomiscuentas service.

Chile’s Buk buys on-demand pay platform PlayFlow

Buk, a Chilean human resources startup, added PlayFlow’s flexible wage advance platform to its operation. It’s Buk’s fourth acquisition in the last year and marks its entry into the world of fintechs.

#Internationalization  🌍

Dock expands operations in LatAm

Brazilian payment infrastructure company Dock has opened offices in Mexico, Peru, Chile and Colombia. The firm will also begin operating in Argentina in the coming weeks and in Ecuador and the Dominican Republic at the end of 2022.

Its entry into the Mexican market was facilitated by the purchase of Cacao Paycard in December. The National Commission of Banks and Securities (CNBV) had denied Cacao a fintech license two months earlier. The Mexican fintech’s co-founders, Gerardo Bonilla and Jorge Álvarez, will join Dock and assume the positions of revenue director and director of Latin American expansion, respectively.

#Crypto 💰

Lemon Cash arrives in Brazil with its crypto solutions

Argentine cryptocurrency fintech Lemon Cash has expanded to Brazil. The wallet grew in its home country by offering a Visa card for cryptocurrency purchases with a cashback program in bitcoin, as well as allowing immediate international transfers. It also pays interest on savings in cryptocurrencies.

The company opened an office in Rio de Janeiro as a first step towards international expansion.

#People 🙋‍♀️🙋‍♂️

Chilean regulator has new head

Chilean economist Solange Berstein has been appointed chairwoman of the country’s financial services regulator, the CMF. Berstein had been serving as head of financial policy at the Central Bank of Chile since 2017.

#Quote of the week 🖋

“The surprising lack of female representation in the fintech sector has a direct impact on the types of products and services that the industry offers its consumers.” – Gabriela Herrera, senior sales executive at Provenir.

Read her views on the challenges facing women in Latin America in this opinion column.

#iupanaExclusive 🔥

Digging into data

Banks that master data management can increase their revenue and returns on investment. Credicorp Capital is a firm believer in this and has shaken up its information management policy with a view to supporting the hyper -personalization of its products.

• Data in Latin America is often outdated, erroneous or duplicated, making its use in forecasts difficult.

• Before trying to produce data silos, it is necessary to separate the pears from the apples—metaphorically speaking.

• Leverage of machine learning, artificial intelligence and cloud storage technology is nascent but promising.

Learn more about the use of strategic data management to increase banking potential in our exclusive report.

Over and out