Paybrokers: we have the local expertise needed for Brazil’s regulations

credit: Shutterstock
credit: Shutterstock

Paybrokers COO Carlos Klein spoke with Payment Expert to dissect Brazil’s regulations when it comes to payments in the sports betting and igaming framework. The Pix system is unique to Brazil and consequently, Klein stresses the importance of having local knowledge to succeed in the market. 

Finally, Klein explains how the Brazil-based payment provider can help operators navigate the regulatory system while helping customers have a seamless experience.

Carlos Klein, COO of Paybrokers

Payment Expert: How exciting is the opportunity of entering and servicing the regulated Brazilian market for Paybrokers?

Carlos Klein: As a leader in our iGaming payments industry, we are thrilled with the opportunities arising from our new regulated market. Brazil boasts a young, digitally savvy population with a strong affinity for gaming. The annual spending on online casinos and bookmakers based abroad is estimated at approximately BRL 2 billion, potentially reaching BRL 10 billion. 

Compared to developed markets, we estimate there’s a huge growth ahead when we think of GDP participation. We are in a privileged position to capture payments and banking services through the whole value chain and expand our offer to cover new obligations arising from the regulation. We will become an even more relevant services provider to the industry.

PE: Looking at the regulations of the framework, what benefits can the use of Pix bring from a regulatory and operational standpoint?

CK: Pix is a must and a great success case in the Brazilian market. Companies cannot think about operating in Brazil without it. It is a cashless payment method, which helps screening and monitoring customers and transactions. Its immediate settlement turns the customer journey into ready-to-play very quickly. Its recon structure is easier than other payment methods available in Brazil too.

PE: On the contrary, what challenges and issues does the Brazil Central Bank’s instant payment method bring?

CK: While there are many benefits, its structure and providers may experience some latency and that prompts the user to premature contact with support channels. Also, it is common that users mistakenly reclaim transactions back upon fraud allegations when in reality it is just a commercial disagreement or a desperate measure to get money back after losses.

PE: What compliance-based issues are operators likely to face in Brazil and how can Paybrokers’ payment platform help to solve these?

CK: We are still to see the full regulatory demands from the law and those arising from the Central Bank after them. We can say that KYC is a challenge in Brazil, mainly due to 27 different ID models and a fraud detection that is around 2.5 times bigger than the experienced in the European market, for example. 

Due to historic reasons, it is a marginal market in Brazil, in a sense that it is associated with illegal activities and suffers a lot of restraints from the incumbent financial system. That may lead to difficult relations with the main banks in Brazil and an increased scrutiny from authorities and the Central Bank. We will address compliance services and that can help our operators to best deal with all the customer identity, fraud, payments and banking issues.

PE: What technological developments are helping to ensure that operators can remain compliant with payment regulations and how is Paybrokers best suited to help them?

CK: As regulatory scrutiny intensifies, compliance becomes paramount for iGaming operators. Stricter standards demand robust Know Your Customer (KYC) protocols, anti-money laundering measures, and data protection. Responsible gambling practices gain traction, emphasising harm prevention and player well-being. 

Paybrokers’ commitment to compliance ensures operational excellence while safeguarding players. ID management and fraud prevention is a flourishing market in Brazil as new players are creating AI-based solutions and working on assuring the biometrics requirements by law at low cost and great efficiency. We can collaborate with our expertise and help to orchestrate relevant services into one fluid experience to support our operators. Also thinking on bank services through the whole value chain provides a wider understanding on transactions behaviour and potential misuses.

PE: How will Paybrokers apply its experience of payments in Brazil to help boost your standing in the market?

CK: Paybrokers is working on providing increased performance in terms of stability and conversion rates and expanding towards offering financial compliance and complimentary services that will help our operator to land in Brazil. We will reduce the overall costs of collections and settlements when the operator encompasses its relations within our full ecosystem banking solution.

PE: What are the major payments and KYC considerations operators should keep in mind when entering Brazil?

CK: We used to say that “Brazil is not for amateurs” when we refer to how hard it is to localise operations for foreign companies. It is usual to find some sorts of requirements or business structures that are not intuitive and are very distinctive to our market. We would say that it is a must to have a local team dealing with business partners and authorities. Be aware of a higher fraud and misconduct in regular operations. 

Also remember that there’s little-to-no expertise on this segment in Brazil and that it’s been illegal for a long time and thus expect strong prejudice from regulators and some segments of Brazilian society.