The end of exclusivity and its impact

Since July 1st the terminal exclusivity has ended in Brazil. Every POS terminal now processes cards from other brands. 

To break up the 90% market dominance that of Cielo and Redecard had, the government enforced some ruling that make it easier for new card brands to enter the market. Not only will this mean lower transaction costs but also estimated savings of R$1.2 billion in equipment rental for the retailers.

According to the CNDL (Confederação Nacional de Dirigentes Lojistas) there are 5 million POS terminals in Brazil spread over 1.5 million stores. Cielo owns 1,6 million of them and Redecard 1 million machines. With the end of the exclusivity this number will go down drastically. Because now a shop only needs one terminal for all its transactions.

Estimates from Abecs are that there are 597 million credit cards (including credit, debit, private label and others). From January until June 3.3 billion transactions were made these cards, representing an amount of 244 billion reals. This is a 21% increase compared to the same period in 2009. And with fixed rates on every transaction, there is a lot of money going around in this industry. Since the liberalization a couple of new players have entered the playing field.

• First Data, the worlds largest credit card payment processor
• Elo is the project from Banco do Brasil and Bradesco.
• Getnet from Santander

It is still too early for concrete results but as the new entrants gain market share and build up their network capacity, things will start changing.

And with more card brands in the market and a larger audience, there are many opportunities. A shared terminal makes it easier for card companies to build out their network. And these networks need all POS applications, which creates new opportunities for application developers.

 If you have any projects you would like to discuss, do not hesitate to contact us at arthur@planobe.com.br!