Nubank to continue ops after Brazil keeps credit card deadlines

Brazilian fintech Nubank is no longer threatening to close its doors after the central bank announced a series of structural measures Tuesday designed to stimulate the economy and boost credit, but did not include the drastic cuts in credit card payment deadlines for retailers that it was expecting.

"The central bank has shown today that there will be no abrupt or unilateral change in payment rules, and that it will work with issuers, purchasers, credit card companies and fintechs to define how possible measures can be implemented in a sustainable, gradual and non-detrimental way, which is very necessary in this highly concentrated sector," Nubank said in a statement published on its Facebook page following the announcement of the measures.

"We are convinced that free competition is the only sustainable source of change to address the distortions in this market: more competitors in the market bring more alternatives of better quality and lower cost to consumers and retailers," the bank noted.

Nubank confirmed to BNamericas on Monday that the possible measures to reduce the payment deadline "could have a significant impact on our business model and would be drastic for the competitiveness of fintechs."

The fintech's cofounder, Cristina Junqueira, had said that cutting the deadline from the current 30 days to just two days, which had been discussed by the government as part of the economic stimulus measures, would herald the end of the digital bank's business.

Junqueira was reported as saying that the change would bring additional costs for all credit card issuers, but that Nubank and smaller issuers would be badly hit, as they do not have the same financing capacity as large banks like Itaú Unibanco, Bradesco and Santander.

If the deadline had been cut to just two days, the banks would have been forced to pay the credit card processor before receiving payment from the consumer.

The measures announced by the central bank on Tuesday focused on making credit cheaper and the financial system more efficient. It is now working toward several short-, medium- and long-term goals in order to make credit more affordable, as Brazil currently has the highest average credit card interest rate in Latin America at some 436% per year.