Reuters: Regulatory News: UPDATE 1-Brazil to set up rules for mobile phone transactions

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UPDATE 1-Brazil to set up rules for mobile phone transactions Oct 29th 2012, 19:15 Mon Oct 29, 2012 3:15pm EDT * Framework bill to be introduced this year-official * Aimed at reducing transaction costs, raising competition * New framework may hamper profits-analysts PORTO ALEGRE, Brazil, Oct 29 (Reuters) - Brazil's government is finalizing a new framework to allow financial transactions through mobile phones, officials said on Monday, in a move that aims to bring more poor Brazilians into the financial system. The action aims to lower the cost of payment transactions, spur competition among merchant service providers and deepen banking penetration, central bank chief Alexandre Tombini said during a central bank event in Porto Alegre. "The measure aims to bring about the security necessary for those involved in these new payment methods, and hands the central bank the task of regulation," Tombini added. The new framework has raised some concerns, however. Analysts a BTG Pactual last week cut the price target for shares of Brazil's largest card payment processor, Cielo , to 48 reais from 63 reais previously, saying government efforts to cut the cost of financial services in Brazil might hamper profit within the sector. "Regulatory risks have become more apparent," analysts led by Marcelo Henriques wrote in a client note. A bill is likely to be introduced to Congress this year, communications minister Paulo Bernardo told journalists at the event. He said details were being discussed with banks, credit card issuers and other service providers. The program would open the door for the use of pre-paid accounts for payment of bills, money wire transfers between users and the adoption of technologies for mobile payments for users that have no credit or debit plastic cards. Mobile payments could compete with a relatively modern, low-cost platform for banking services for the poor, being led by Banco do Brasil SA's Banco Postal. At 4:05 p.m. (1805 GMT), shares of Cielo rose 0.57 percent to 49.03 reais. At the same time, Brazil's main stock index Bovespa fell 0.68 percent, dragged down by a drop in state-controlled oil company Petrobras'. Link this Share this Digg this Email Reprints

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