BRAZIL Law and Practice Contributed by: Eduardo Castro, Pedro Nasi and Gabriel Libanori, Machado, Meyer, Sendacz e Opice
by the BCB and submit an authorisation request to operate as a regulated VASP within 270 days after the enactment of BCB Resolution No 520/25. Unlicensed Fintechs Unlicensed fintechs typically operate through models that avoid performing regulated functions directly but still rely on contractual partnerships with institutions authorised to operate by the BCB. The main unlicensed business models in Brazil are as follows: • marketplaces may act as sub-acquirers, accredit - ing merchants to accept payment instruments and receiving funds from acquirers rather than from issuers of payment instruments (ie, sub-acquirers are creditors of acquirers and debtors of mer - chants); • unregulated entities may settle closed-loop pay - ment schemes and explore certain exemptions under the regulations to offer payment services, such as limited-purpose payment schemes; • unregulated companies may provide international payment services (also known as international payment facilitation) to merchants located outside Brazil, which allows the purchase of goods and services abroad by Brazil-based buyers, by col - lecting funds from end-users in local currency and remitting them abroad via consolidated foreign exchange transactions with a financial institution authorised to operate in the foreign exchange market (this arrangement may change depending on the results of BCB’s Public Consultation Notice No 124/2025); • credit origination activities, either via a banking correspondent or BaaS structure; and • white-label or co-branded solutions, leveraging the regulatory licence of authorised financial institu - tions to mediate the offer of financial products and services, such as loans, foreign exchange and pay - ment instruments. 2.3 Compensation Models The BCB establishes caps and baskets for certain fees derived from financial/payment products and services, including specific rules related to fees when charged under Pix. For instance, Pix users who are
individuals cannot be charged by Pix participants for remitting or receiving funds. With respect to disclosure, the general rule applicable to the Brazilian financial and payment systems is that fees should be clearly disclosed to end clients. Fur - thermore, with respect to credit transactions involving individuals and certain small-sized companies, finan - cial institutions are required to disclose the total costs involved prior to the execution of the transaction in a standardised manner set forth by the BCB, to enable customers to compare the costs of the same prod - uct offered by different institutions (the so-called total effective cost; custo efetivo total – CET). The same rationale applies to spot foreign exchange transac - tions of amounts equal to or less than USD100,000 (total effective amount; valor efetivo total – VET). 2.4 Variations Between the Regulation of Fintech and Legacy Players Traditionally, the regulation applicable to fintech indus - try participants is lighter than that applicable to legacy players, such as traditional banks. However, there is currently a trend in the Brazilian regulatory framework towards rebalancing the regulatory burden imposed upon fintech players. For instance, the licencing process applicable to payment institutions used to be simpler than that for financial institutions. However, changes were recent - ly made to make these processes more similar, and there are now very few differences between them. On the capital requirements side, the creation in 2022 of different prudential conglomerates comprising at least one payment institution evidences the regulator’s aim to avoid regulatory arbitrage and adopt both a risk-based approach and the principle of “same risk, same activity, same regulation”. 2.5 Regulatory Sandbox Brazil has regulatory sandboxes within the scope of the BCB, the CVM and the Superintendence of Pri - vate Insurance ( Superintendência de Seguros Priva- dos SUSEP) that were involved in a selection process for innovative projects between 2020 and 2021. Many of these projects are still ongoing, but the regulatory sandboxes are not currently open for new partici -
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