Reuters: Regulatory News: Brazil's Rousseff to press for lower fees for card users-report

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Brazil's Rousseff to press for lower fees for card users-report Oct 22nd 2012, 10:45 Mon Oct 22, 2012 6:45am EDT * Rousseff wants acquirers to cut fees, Estado says * Government seeks end to card exclusivity accords * Rousseff's office did not comment on Estado report SAO PAULO, Oct 22 (Reuters) - Brazilian President Dilma Rousseff will press card payment processors to charge less for clearing food voucher, debit and credit card transactions, in a renewed step to slash the cost of financial services in Latin America's largest economy, O Estado de S. Paulo newspaper reported on Monday. Rousseff wants policymakers to figure out ways to cut fees in the sector, Estado said, without saying how it obtained the information. A spokeswoman at the Presidential palace in Brasilia was not available to comment on the report. A decline in local borrowing costs to single-digit levels and the massive use of cards as an alternative, rather than a substitute, for cash is drawing increased attention from regulators over the way the $400 billion a year industry behaves. Last week, Aldo Mendes, the central bank director in charge of monetary policy, said that fees charged by so-called merchant acquirers are "declining, but not as fast as we wish." Late last year, the central bank said in an annual report on the card payment processing sector that incumbent acquirers are bearing the brunt of declining fees and the entry of new competitors - indicating that policymakers would not press for regulatory changes in the industry. According to the report, the government wants an end to exclusivity agreements between acquirers, the companies that get card transactions settled, and brands such as Visa and MasterCard. Mendes said that the central bank endorses the end of such accords as a way to encourage competition in the sector. For months, analysts have feared that potential regulatory changes to the card processing industry could erode profit margins for Cielo, the nation's largest merchant acquirer and currently the only listed company in the sector, by lowering incentives to use cards in favor of cash. According to the Estado report, the government might press for reductions in some fees during the year-end holiday season - usually the busiest for retailers. Merchant discount rates, or the fee that acquirers charge customers to have their transactions cleared, at around 4 percent of the value of the purchase with a credit card, is "too high," Estado said, citing government sources. In the case of food vouchers, the government is unhappy that fees charged by acquirers are even higher, Estado said. Equipment rental fees, known in the industry as POS fees, have declined significantly over the past year, the newspaper said. Link this Share this Digg this Email Reprints

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