Digital Financial Services in Brazil
Explore the regulatory challenges and mobile subscription trends in Brazil, highlighting the adoption of digital financial services and mobile payments. Learn about mobile subscriptions, population banking trends, and payment methods in different economic classes.
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ITU Regional Standardization Forum for Americas (Washington D.C., United States, 21 September 2015) Digital Financial Services in Brazil Jo o Alexandre ZANON, Regulatory Specialist, PRRE/SPR/ANATEL zanon@anatel.gov.br
The Brazilian Scenario. Why regulate Mobile Payments. Law N 12.865, from October 9, 2013. Regulatory Challenges. The Focus Group DFS.
Mobilesubscriptionsin Brazil 278 300 271 262 242 250 Source: Anatel 203 200 174 213 150 100 65 50 - Prepaid Pospaid 2009-12 2010-12 2011-12 2012-12 2013-12 2014-09 2014-09 Prepaid Pospaid The total amount of mobile subscriptions reached 278 millions in September, 2014. 77% of these subscriptions were under a prepaid plan.
Mobilesubscriptionsin Brazil Others 0.97% OI 18.47% VIVO 28.66% TIM 26.89% Mobile Broadband Subscription 133 CLARO 25.01% Population 203 Mobile Subscription 278 - 100 200 300 (in million) Source: Anatel
Mobile Density in Brazil North 117% Northeast 125% Midwest 159% Southeast 145% Brazil 137% South 140% Source: Anatel (September, 2014)
Brazilian population with bank account Population with bank account (%) 80% 70% 70% 64% 63% 60% 52% 46% 50% 39% 40% 29% 27% 30% 16% 20% 10% 0% 2005 2007 2010 Classes A/B (Upper Class) Classe C (Middle Class) Classes D/E (Lower Class) Source: Central Bank of Brazil
Payment Methods in Brazil Classes A/B (Upper Class) 66% 70% 57% 60% Classes D/E (Lower Class) 50% 100% 91% 40% 86% 90% 25% 30% 18% 80% 17% 15% 20% 70% 10% 1% 1% 0% 0% 60% 0% 50% Cheque Cash Credit card Debit card Direct Debit 40% 30% Classe C (Middle Class) 20% 8% 90% 6% 5% 10% 3% 77% 1% 0% 0% 0% 75% 80% 2007 2010 0% 70% Direct Debit Cash Debit card Credit card Cheque 60% 50% 40% 30% 2007 2010 13% 20% 12% 10% 9% 3% 10% 1% 0% 0% 0% Cheque Credit card Cash Debit card Direct Debit Source: Central Bank of Brazil 2007 2010
Today Different setups and payment Technologies Smartphone Huge Innovation on solutions: Mobile Money e Digital Wallet. Internet banking at Mobile Terminal. E-Payment service providers. In-app Payments. Mobile Point of Sale (mPOS). Access Technologies: Mobile Network based (SMS, USSD). Close Contact (NFC). Based on Cloud/Internet. Payment Models: Credit card Based. Pre-Paid Account. With or without pre-approved credit.
Main Payment Technologies Market Share (2009) Volume and Valor Device Acceptance User Technologies Security Usability Interaction 77% 93% SMS 2% 5% WAP/Web/HTTPS 4% 1% USSD 16% 1% NFC Source: Gartner Market Insight: The Outlook on Mobile Payment (2010) - Telef nica 3 in 4 devices sold on Brazil are smartphones. 19,5 millions of smartphones sold between January e may de 2014. Growth of 71% when comparting to the five first months of 2013. Smartphones sells should reach 47 millions of devices in 2014. Source: data from Jul/2014 - Associa o Brasileira da Ind stria El trica e Eletr nica Abinee.
Why Regulate Need of a Legal Landmark for the current setups to guarantee Juridical Stability. Address some current setups that today don t have any government regulation but are very important to consumers; Reduce Popular economy Risk and Systemic Economy Risk; Promote Financial Inclusion; Guarantee Crucial user rights; Promote Low cost solutions for end-users; Promote Competition, through an open and interoperable platform. Creation of a National Task Force, with participation of Brazil Central Bank, Ministry of Communications and Anatel toe the Needed Legal Landmark (MP 615/13, May 17, 2013). Law N 12.865, October 9, 2013: Mandate about payment setups and Payment Institutions integrated to the SPB (Brazilian Payment System) Arts 6 to 15 .
Principles and Objectives Interoperability Reliability, quality and safety Innovation Non- Eficiency discriminatory treatment
Principles and Objectives Interoperability at the payment setup and between different setups; Innovation at payment setups and incentive to new payments models; Reliability and Efficiency at payments setups and institutions, promote competition and possibility to transfer digital money funds to other payment setups or institutions; Non-discriminatory treatment to necessary services and infrastructure for deployment of new payments setups; End-User needs: freedom of choice, security, economic protection, non-discriminatory treatment, privacy and personal data protection, transparent and complete terms of services; Reliability, Quality and Security of payments services; Financial Inclusion, taking into account quality, security standards and transparency.
Mandates Division Clear scope of regulatory focus will help both the regulators and the industry
Today, does Anatel need to create new Regulations? Art. 61. Value added service is the activity that adds value to the telecommunications service that supports same, and with which new features related to the access, storage, presentation, handling or recovery of information are not mistaken. Law n. 9.472/97 General Telecommunication Law: 1 Value added service is not a telecommunications service, however, the provider thereof is classified as user of the telecommunication service providing support thereto, with the rights and obligations inherent to this condition. 2 Access to the utilization of telecommunications service networks for rendering value added services is assured to interested parties, for which the Agency shall regulate the conditions as well as organize the relationship between same and the telecommunications service providers. III to a non-discriminatory treatment when using the service, if the technical conditions are fulfilled, taking into account the todays regulation; Art. 3 (consumers rights), III of RGC Consumer General Regulation
Other Regulatory Challenges Conflict Prevention and Resolution, in partnership between BACEN, Anatel e SNDC Consumers Rights defense: Transparent and complete Users Term of Service; Security, Privacy/Data Protection; Reliability transaction confirmation/error notification; Reliable and fast Unrecognized debit resolution; A Trustable environment generate growth: Ex: Secure Terminal, combat to fraud and disloyal commercial practices. Avoid strong regulation at new players, to stimulate innovation and competition. Stablished a transaction process to implement to current setups the principles mandated on Law 12.865/2013. Example: Interoperability, non-discriminatory access to infrastructure. Promote Financial Inclusion
The Focus Group DFS Digital Financial Services
ITU-T FG DFS Created in the middle of 2014 with a 2 year mandate; Participants: ITU Members, other UN organizations, other standard organizations, NGOs e private sector; 4 Working Parties: Ecosystem Interoperability Technology, Innovation and Competition Consumer Experience (Quality, Security, Data/Privacy Protection) Strong Relation with ITU-T SG3: Study Companies Market Power/Relevance and the need of regulatory remedies: Mandatory Interoperability? Necessary to regulate prices? price-cap or cost-based?
Thank You! Jo o Alexandre Zanon zanon@anatel.gov.br
