The Central Bank of Brazil (BCB) will impose interchange fee limitations on prepaid cards starting in April 2023 and harmonize the terms of settlement for debit and prepaid card transactions.
The interchange charge maximum for prepaid cards will be 0.7%, according to Reuters. According to the BCB, the changes would “increase the efficiency of the payments ecosystem, boost the use of less costly payment instruments, and enable the lowering of costs for businesses to accept these cards.”
The central bank requested public input on the matter last year, but the replies suggested a 0.5% cap for both debit and prepaid cards, a move that would have infuriated FinTechs more than the 0.7% cap now in place.
According to Reuters, interchange fees for debit cards now range from a maximum value per transaction of 0.8% to a cumulative weighted average computation of 0.5%. Under the BCB’s amendments, debit card interchange fees will only be capped at 0.5% per transaction.
Brazilian banks have asked the BCB to level the playing field by capping interchange costs for prepaid cards. The study found that the rise of FinTechs operating without charge caps gave them an unfair advantage.
Interchange fees on prepaid cards, according to Brazilian FinTech Nubank, made up 7% of its revenue in the fiscal year that ended on June 30. According to Nubank, if the cap had been in force, the challenger bank’s revenue would have dropped by 2.9%.
The story states that Nubank shares were down 2.3% in midday trade when the fee limits were initially reported. Brazilian payment processor PagSeguro Digital witnessed a 9.5% share price decline, while Inter & Cofell’s stock Fall 9.8%.
