The Brazilian Government issued Provisional Measure (Medida Provisória) No. 615, of May 17, 2013 (MP 615/2013), that, among other provisions, rules on the payment arrangements and payment institutions that participate of the Brazilian Payment System (Sistema de Pagamentos Brasileiro –SPP), which must still be regulated by the Central Bank of Brazil (Banco Central do Brasil – Bacen) in accordance with the guidelines to be established by the Brazilian Monetary Council (Conselho Monetário Nacional – CMN). The applicable provisions of MP 615/2013 on this subject are outlined herein.

This new legislation empowers Bacen to authorize and monitor the activity of all the agents of the electronic payment market which comprise the companies that will offer electronic accounts ("payment accounts") to be used for payments and transfers via mobile devices such as mobile phones, regardless of whether or not they are financial institutions. These companies are known as "payment institutions" and may include, among others, banks and non-financial companies such as mobile phone operators, credit card companies and special purpose entities. The money deposited into a payment account by the end user of the service must be segregated from the assets of the payment institution that will operate the payment account. The resources so deposited cannot be offered in guarantee of any transaction made by the payment institution, and will not be subject to the bankruptcy, liquidation or any similar event affecting the payment institution.

MP 615/2013 authorizes Bacen to issue the standards and instructions necessary to its fulfillment, as well as to establish payment arrangements for the already operating payment arrangement settlors and payment institutions, time limits for compliance with the provisions of MP 615/2013, the rules set forth by Bacen and the guidelines of CMN. Within the term of 180 days counted as of May 20, 20131, based on the guidelines of CMN, Bacen shall define the minimum requirements for the provision of services referred to in MP 615/2013.

Without prejudice to the performance of the activities provided for in MP 615/2013, which are expressly permitted, payment institutions may not carry out private activities of financial institutions. Payment institutions are subject to the special temporary administration regime, intervention and extrajudicial liquidation, under the conditions and in the form laid down in the legislation applicable to financial institutions.

The terms used in the SPP are defined in MP 615/2013 as follows:

(i) payment arrangement (arranjo de pagamento) means a set of rules and procedures governing the provision of certain payment service to the public accepted by more than one recipient, by means of direct access by end users, payers and recipients;

(ii) payment arrangement settlor (instituidor de arranjo de pagamento) means the legal entity responsible for the payment arrangement and, when appropriate, by the use of the trademark associated with the payment arrangement;

(iii) payment institution (instituição de pagamento) means the legal entity that, by joining one or more payment arrangements, has as main or ancillary activity,  alternatively or cumulatively: (a) to make available the service of providing or withdrawing resources held in payment account; (b) to perform or facilitate the related payment instruction for a particular payment service, including transfer originated from or intended for payment account; (c) to manage payment account; (d) to issue payment instrument; (e) to accredit the acceptance of payment instrument; (f) to carry out remittance of funds; (g) to convert physical or book-entry currency into electronic currency or vice-versa and/or to accredit the acceptance or manage the use of electronic currency; and (h) other activities related to the provision of payment service, designated by Bacen;

(iv) payment account (conta de pagamento) means the registry account held on behalf of the end user of payment services used for the execution of payment transactions;

(v) payment instrument (instrumento de pagamento) means the device or set of procedures agreed between the end user and his/her/its payment service provider used to initiate a payment transaction; and

(vi) electronic currency (moeda eletrônica) means the resources stored in any device or electronic system that allows the end user to perform the payment transaction.

Financial institutions may join the payment arrangements in the form set forth by Bacen, as per guidelines established by CMN.

The set of rules that discipline the use of a card issued by a company for the acquisition of goods or services offered by such company is not deemed to be a payment arrangement.

MP 615/2013 does not apply to payment arrangements in which the volume, scope and nature of the business to be defined by Bacen, pursuant to the parameters established by CMN, are unable to offer risk to the popular economy and the normal functioning of retail payment transactions.

The resources held in payment accounts on behalf of the end user are completely segregated from those of the payment institution and consequently such resources: (i) are separate and  cannot  be confused with the resources owned by the payment institution; (ii) do not respond directly or indirectly by any obligation of the payment institution, nor can they be subject to arrest, attachment, search and seizure, or any other act of judicial constriction due to debts of the payment institution; (iii) are not deemed to be assets of the payment institution, for the purposes of judicial or extrajudicial liquidation or bankruptcy; and (iv) may not be given in guarantee to secure debts assumed by the payment institution.

Payment arrangements and payment institutions shall observe at least the following principles and objectives: (i) the interoperability with the payment arrangement and between different payment arrangements. The so-called interoperability is the ability of a system to be compatible with another; (ii) innovation in payment arrangements and diversity of business models; (iii) soundness and efficiency of payment arrangements and payment institutions, promotion of competition and predicting electronic currency balances transfer, when applicable, for other payment arrangements or institutions; (iv) non-discriminatory access to infrastructure and services required for the functioning of the arrangements for payment; (v) meeting the needs of end users, in particular freedom of choice, safety, protection of their economic interests, non-discriminatory treatment, privacy and personal data protection, transparency and access to clear and complete information on the conditions of provision of services; (vi) reliability, quality and safety of payment services; and (vii) financial inclusion2, with due observance of the equivalent standards of quality, security and transparency in all payment arrangements.

Bacen, CMN, the Ministry of Communications (Ministério das Comunicações) and the National Telecommunications Agency (Agência Nacional de Telecomunicações - ANT) shall encourage, within the framework of their competence, financial inclusion by means of the telecommunications sector participation in the provision of payment services and may, on the basis of periodic evaluations, adopt measures to encourage the development of payment arrangements using access terminals to telecommunications services owned by the user.

According to guidelines established by CMN, Bacen will: (i) regulate the payment arrangements; (ii) regulate the establishment, operation, supervision of payment institutions and the discontinuity in the provision of their services; (iii) limit the corporate purpose of any payment institution; (iv) authorize the imposition of payment arrangements in the country; (v) authorize the incorporation, operation, transfer of control, merger, split-up and amalgamation of any payment institution, including when it involves the participation of any non-resident individual or legal entity; (vi) establish conditions and authorize the possession and exercise of positions in statutory and contractual bodies of payment institutions; (vii) exercise surveillance over the payment arrangements and apply appropriate sanctions; (viii) supervise payment institutions and apply appropriate sanctions; (ix) adopt preventive measures, in order to ensure consistency, efficiency and proper functioning of payment arrangements and payment institutions including to: (a) establish minimum operating limits; (b) lay down rules of operation, risk management, internal controls and governance, including the corporate and control mechanisms to ensure the decision-making autonomy of the direction and control bodies; and (c) limit or suspend the sale of goods, the provision of payment services and the use of operational measures; (x) adopt measures to promote competition, financial inclusion and transparency in the provision of payment services; (xi) cancel ex officio or at the request the authorizations contemplated in items (iv), (v) and (vi) herein; (xii) coordinate and control payment arrangements and the activities of payment institutions; (xiii) regulate charges, commissions and any other form of remuneration for payment services, including among members of the same payment arrangement; and (xiv) provide for the forms of application of registered resources in payment account.

Furthermore, with due observance of the guidelines established by CMN, Bacen also (a) will govern the hypothesis for remission of the authorizations referred to in items (iv), (v) and (vi) in the previous paragraph; (b) may provide for the interoperability criteria with the payment arrangement or between different payment arrangements; and (c) will define the assumptions that may cause the cancellation of the authorization referred to in item (xi) previous paragraph and the necessary procedural acts.

In the performance of the activities provided for in items (vii) and (viii) above, Bacen may require the payment arrangement settlor and the payment institution displaying documents and books and bookkeeping, including real-time access to the information stored in electronic systems, considering the denial of attending this demand as an embarrassment to its supervision subject to sanctions.

Also following the guidelines of the CMN, Bacen may establish requirements for the activities related to outsourcing activities for participants of payment arrangements and for the actions of third parties as agents of payment institutions. The payment arrangement settlor and the payment institution respond administratively by the actions of third parties retained by them. The entity that does not participate in any payment arrangement activity and acts exclusively in the provision of infrastructure such as telecommunications services is not subject to this regulation.

Bacen may submit to public consultation the draft normative acts to be edited in the exercise of its powers laid down in MP 615/2013.

In addition to the powers assigned to CMN and Bacen by MP 615/2013, there are also legal assignments of the Brazilian Competition Defense System (Sistema Brasileiro de Defesa da Concorrência - SBDC) and other agencies or entities responsible for sector regulation and supervision, which need to be met.

The payment institutions and the payment arrangement settlors, their administrators and members of their respective contractual or statutory bodies that commit infractions to MP 615/2013 and to the guidelines and standards established by CMN and Bacen are subject to the penalties foreseen in the legislation applicable to financial institutions. The appropriate penalties for violations of the standards of consumer protection and competition imposed by the bodies of the National Consumer Protection System and SBDC may also be applied.

The Brazilian Government is trying to foster new payment methods to enable Brazilians who are not yet "financially included" (they do not have bank accounts and settle all their payments in cash) to be included and also participate of the Brazilian financial and payment systems. For this to happen, in addition to regulate the existing payment services, it is necessary to reduce the cost of credit cards and permit the use of mobile phones as valid payment methods.


1. This is the date of publication of MP 615/2013 in the Official Gazette of the Union (Diário Oficial da União – DOU), when the new legislation came into full force and effect.

2. The Brazilian Government is trying to foster new payment methods to enable Brazilians who are not yet "financially included" (they do not have bank accounts and settle all their payments in cash) to be included and also participate of the Brazilian financial and payment systems. For this to happen, in addition to regulate the existing payment services, it is necessary to reduce the cost of credit cards and permit the use of mobile phones as valid payment methods.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.