Why a Payment Institution (PI) License is Essential for Fintech Expansion in Brazil

With Brazil’s burgeoning fintech landscape, securing a Payment Institution (PI) license offers significant opportunities for financial services providers to operate within a rapidly growing and receptive market. This license, regulated by the Central Bank of Brazil, allows companies to provide payment-related services while adhering to the country's compliance standards. In this piece, we’ll explore the benefits, requirements, and impact of obtaining a PI license and how ReadyCorp simplifies the licensing journey, particularly for foreign companies.

Understanding the PI License: A Key to Brazilian Fintech Operations

The Payment Institution license is designed to support companies in offering essential financial services such as payment processing, electronic wallets, and peer-to-peer transfers. Brazil’s payment sector has witnessed unprecedented growth, with digital payments increasingly preferred across demographics. The PI license, governed under the framework of Brazilian Law 12,865, grants companies the ability to securely conduct business, instilling trust among users and financial institutions alike.

Benefits of the PI License:

• Access to a Huge Consumer Base: Brazil has one of the largest fintech user populations in Latin America, with millions of consumers turning to digital payments. The PI license enables companies to tap into this market with credibility and consumer confidence.
• Regulatory Compliance and Security: Operating under a PI license means adhering to the Central Bank’s rigorous standards for security, transparency, and consumer protection, which bolsters the company’s standing and trustworthiness.
• Increased Market Expansion: With a licensed presence, companies can seamlessly expand across Brazil and potentially into other LATAM markets. Brazil’s regulations often set a regional standard, so being licensed in Brazil can ease expansion in neighboring countries.
• Enhanced Partnerships: A PI license demonstrates compliance and accountability, opening doors to partnerships with established financial institutions, technology providers, and payment processors, thereby enhancing service offerings.

Requirements and Regulations for the PI License

The licensing process, while advantageous, involves specific regulatory obligations:

• Capital Requirements: Companies must meet minimum capital requirements, which vary depending on the transaction volume and risk profile.
• AML and KYC Compliance: Strict anti-money laundering (AML) and know-your-customer (KYC) protocols must be followed, and licensed institutions are subject to regular audits.
• Data Protection and Security: Companies are required to implement secure data management practices, adhering to Brazil’s General Data Protection Law (LGPD) to protect user information.
• Ongoing Reporting: PI license holders must submit regular financial and operational reports to the Central Bank to ensure compliance and transparency.

With a rapidly evolving regulatory framework and growing consumer demand for digital financial services, Brazil presents a prime opportunity for fintech innovation. The PI license not only opens doors to Brazil’s diverse market but also positions companies at the forefront of Latin America’s digital finance ecosystem. By partnering with ReadyCorp, businesses can secure their place in Brazil’s fintech landscape, gaining a competitive edge in this dynamic market.

The Strategic Value of an Electronic Money Institution (EMI) License in Brazil

As Brazil continues to position itself as a leading fintech hub in Latin America, the Electronic Money Institution (EMI) license has become increasingly valuable for businesses seeking to offer electronic payment services in this high-potential market. With its large, tech-savvy population, an EMI license not only grants access to a vibrant financial ecosystem but also provides substantial regulatory and operational benefits for companies in the digital finance space.

An EMI license in Brazil, regulated by the Central Bank of Brazil (BCB), is designed to empower businesses to provide electronic money issuance, prepaid cards, payment processing, and digital wallet services. Since Brazil’s regulatory framework is favorable to financial innovation, the EMI license serves as an official stamp of legitimacy and trust, enhancing a company’s reputation and accessibility in the financial market.

Key Advantages of Holding an EMI License in Brazil

• Broad Market Access
  Brazil’s large population—over 210 million people—includes one of the world’s most enthusiastic groups of digital banking users. With an EMI license, companies can offer a range of services, from digital wallets to payment processing, meeting the country’s growing demand for financial technology. This license is particularly valuable for companies targeting Brazil’s rapidly increasing number of unbanked and underbanked citizens, who now rely on digital solutions.
• Compliance and Enhanced Credibility
  The EMI license subjects businesses to the Central Bank’s regulatory framework, which emphasizes financial security and transparency. Licensed institutions can gain consumer trust by aligning with rigorous standards in anti-money laundering (AML) and cybersecurity, ensuring a secure environment that appeals to both customers and business partners.
• Tax Benefits for Financial Institutions
  While Brazil has high corporate tax rates—34% on average—EMIs can access tax reductions on income generated from export services and other financial incentives. These benefits are part of Brazil’s strategic focus on boosting its fintech sector and reinforcing its attractiveness as a regional financial hub.
• Operational Flexibility for International Transactions
  An EMI license provides flexibility in currency exchange and international fund transfers, allowing licensed institutions to conduct cross-border transactions with fewer regulatory obstacles. This is especially advantageous for businesses facilitating international remittances and currency conversions, which are essential in a globally interconnected market.
• Increased Integration with Brazil’s Financial System
  Licensed EMIs gain access to Brazil’s financial infrastructure, including PIX, the Central Bank’s instant payment platform. This integration offers a seamless experience for users and positions licensed institutions competitively among traditional banks and fintechs. PIX, which operates 24/7, allows EMIs to facilitate instant transfers, broadening service offerings and enhancing customer satisfaction.

As Brazil establishes itself as a fintech leader, acquiring an EMI license could be a transformative step for companies seeking to offer electronic money and payment services in South America. The EMI license not only facilitates entry into Brazil’s expansive financial market but also brings a host of regulatory and operational advantages. With ReadyCorp’s expertise, businesses can navigate the licensing process seamlessly and leverage Brazil’s dynamic digital finance ecosystem.

Brazil:

PI (Payment Institution) License: 75.000 EUR

 • Incorporation of a Limited Liability Company;

 •  Shareholders' Agreement -  Drafting and negotiation of the shareholders' agreement;

 • Obtaining a CNPJ for the Foreign Shareholders and Registration with the Central Bank;

 • ReadyCorp will analyze the adherence of your group within the Brazilian Central Bank requirements;

 •  ReadyCorp will conduct the entire authorization application process with the Central Bank so that you may act as a Payment Acquirer.

Brazil:

EMI (Electronic Money Institution) License:

88.650 EUR

Payment Institution with EMI activities including: E-Wallets, Cross-border Transactions, and Merchant Acquiring. 

• Incorporation of a Limited Liability Company;

 •  Shareholders' Agreement -  Drafting and negotiation of the shareholders' agreement;

 • Obtaining a CNPJ for the Foreign Shareholders and Registration with the Central Bank;

 • ReadyCorp will analyze the adherence of your group within the Brazilian Central Bank requirements;

 •  ReadyCorp will conduct the entire authorization application process with the Central Bank so that you may act as a Payment Acquirer.