Shares in Brazilian card processors fall sharply after rival cuts interest rate for merchants
(Adds request from antitrust authorities)
By Paula Laier
SAO PAULO, April 18 (Reuters) - Shares of Brazilian card
payment processors Cielo SA, PagSeguro Digital Ltd
and StoneCo Ltd fell sharply on Thursday after
rival Itaú Unibanco Holding SA's card-processing unit
cut interest rates for small- and medium-sized merchants.
StoneCo and PagSeguro, which are both listed in New York,
were down 22.5 percent and 11.5 percent, respectively, while
Cielo fell 8 percent on the São Paulo stock exchange.
Rede, Itaú's card processor, said on Wednesday evening it
would advance payments to merchants in as little as two days,
compared with the usual 30-day period, charging no interest,
which will increase competition in the payments sector.
The bank's two requirements for the service are that clients
have a checking account with Itaú and annual revenues no higher
than 30 million reais ($7.63 million), Itaú said in a statement.
Card processors in Brazil charge discount rates to advance
cash in a business that has become increasingly important to
their business models.
Analysts at Credit Suisse said in a note to clients that
this payment model was likely to become "the new standard,"
hurting all card processors' results.
"All in all, as a reference, we estimate an annualized net
profit impact of 32 percent for Stone and 19 percent for Cielo,
all else held equal," Credit Suisse analysts wrote.
The impact on PagSeguro, however, may be less painful, as it
already offers payments for micro-merchants in two days.
Brazil's antitrust watchdog, Cade, sent Itau a request for
more information on the decision to cut interest rates, asking
for an answer by May 3, according to a document released on
($1 = 3.9332 reais)
(Reporting by Paula Laier; Additional reporting and writing by
Carolina Mandl; Editing by Dan Grebler and Peter Cooney)
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