Brazil’s Acquiring Market Opening-Up

Navigator Edition: January 2014
By: Janinne Dall’Orto

With over R$690 billion (approximately US$300 billion) in card sales volume in 2012, the Brazilian market is the largest acquiring market in Latin America, and Brazil’s card volume grew at double digits between 2006 and 2012.  Considering prevailing pricing for acquiring and related products, First Annapolis estimates Brazil to be the second largest acquiring market in the world, by revenue.  Therefore, it is no small matter that the acquiring industry has opened to international acquirers due to events of the past several years.

Historically, Brazil had brand-level acquiring exclusivity, with Visanet (now Cielo) processing Visa transactions and Redecard processing MasterCard transactions. In 2010, after a study conducted by the Brazilian government showed potential anti-competitive aspects of the payment card industry, Visanet and Redecard agreed to end acquiring exclusivity for Visa and MasterCard transactions.  Visa and MasterCard, similarly, have issued licenses to new acquirers.  As a result, the market saw the entry of new players such as Banco Santander (in association with GetNet), Elavon, and Global Payments.

In addition to the major international card schemes, there are a number of domestic card networks present in Brazil, the largest of which include Elo and Hipercard.  Traditionally, Elo has been acquired by Cielo, and Hipercard by Redecard, and the 2010 agreement to end acquiring exclusivity did not include domestic payment networks.  This exclusivity with these payment networks constitutes a meaningful entry barrier for international acquirers, and in 2011, the Central Bank of Brazil published a Statistical Update regarding the Brazilian Payment Card Industry, which concluded that despite the end of exclusivity, there has not been a significant change in acquiring market shares, as Cielo and Redecard still control over 90% of the market.

In 2013, the Brazilian government took further steps to open the acquiring competitive landscape.  The Central Bank of Brazil ended the Brazilian card industry’s self-regulation system and appointed itself as regulator.  In November, the Central Bank issued the regulatory framework for the industry.  Through this framework, the Brazilian government is looking to promote, among other objectives, financial inclusion, competition, innovation, reliability of the system and the interoperability of payment networks.  In light of this new regulatory environment, Mr. Rômulo de Mello Dias, Cielo’s CEO,  stated during Cielo’s 2013 Q3 earnings call that he expects interoperability of payment schemes to happen in the short term.

Brazil continues to be a difficult market for international acquirers to enter, notwithstanding the attractive characteristics of the Brazilian payments market and the latest efforts by the government to foster greater competition.  Cielo and Redecard are formidable competitors with strong market positions.  Further, Brazil has many local payment nuances, a highly concentrated banking industry, a large informal economy, and significant bureaucratic requirements and processes.  However, it is difficult to see globalizing acquirers not targeting Brazil, and their ability to enter the market has become more plausible, on the margin.

Figure 1: Card-based Sales Volume in Brazil
(R$ Billions)


Note: Volumes include both commercial and consumer payments. Volumes do not include charge cards, prepaid cards and store cards.
Source: Euromonitor.

For more information, please contact Janinne Dall’Orto, Senior Manager, specializing in Merchant Acquiring,

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