* Framework bill to be introduced this year-official
* Aims to deepen banking penetration, boost competition
* New framework may hamper profits-analysts
By Alonso Soto
PORTO ALEGRE, Brazil, Oct 29 Brazil's government
is finalizing a new regulatory framework for payments through
mobile phones, officials said on Monday, in a move that aims to
bring more poor Brazilians into the financial system and spur
competition among payment providers.
The action aims to lower the cost of payment operations,
raise competition among merchant service providers and deepen
banking penetration, central bank chief Alexandre Tombini said
during a central bank event in Porto Alegre.
"The measure aims to bring about the security necessary for
those involved in these new payment methods, and hands the
central bank the task of regulation," Tombini added.
The new framework has raised some concerns, however.
Analysts a BTG Pactual last week cut the price target for
shares of Brazil's largest card payment processor, Cielo
, to 48 reais from 63 reais previously, saying
government efforts to cut the cost of financial services in
Brazil might hamper profit within the sector.
"Regulatory risks have become more apparent," analysts led
by Marcelo Henriques wrote in a client note.
A bill is likely to be introduced in Congress this year,
Communications Minister Paulo Bernardo told journalists at the
event. He said details were being discussed with banks, credit
card issuers and other service providers.
The framework could also be implemented via an executive
order, a measure that would give it immediate effect, but that
ultimately would need to be ratified by Congress, officials
PLENTY OF OPPORTUNITIES
Regulation of mobile payments would open the door for the
use of pre-paid accounts for payment of bills, money wire
transfers between users and the adoption of technologies for
mobile payments for users that have no credit or debit plastic
"We know of phone operators and several banks that want to
create partnerships and launch new products," central bank
director Aldo Mendes told reporters.
Murilo Portugal, president of the federation of Brazilian
banks, told Reuters that mobile payments represent an
opportunity for banks to take advantage of a low-cost and
"I see many opportunities because this is a widely used
technology in Brazil," Portugal said at the event.
Cell phones are widely used in Brazil, from Amazon jungle
outposts to the densely populated cities in the southeast. There
are 259 million cell phones in a country of about 190 million
people, according to government data.
Shares of Cielo rose 1.54 percent to 49.50 reais
on Monday. Brazil's benchmark stock index Bovespa ended
the day down 0.17 percent.