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Visa (NYSE: V) is confident that the end of its exclusive agreement with Brazilian card acquirer Cielo (formerly known as VisaNet) on July 1 will open up an increasingly competitive market and generate new opportunities for the company, Visa president for Latin America and the Caribbean Eduardo Eraña told BNamericas.
"With Cielo, we achieved large coverage and a development that represents part of the success that we've had in Brazil. We will work with other companies, bring new technologies, and I think it will be all very positive for the development of Brazil's payment system," Eraña said in a phone interview.
Brazil's card market is undergoing significant changes as the government has been working since last year on a wide-ranging reform to take on the vertical integration of the card industry and increase competition by reducing entry barriers.
"Other players are also getting ready to receive Visa transactions. This will deliver a new way of operating in the country; we think competition always brings new things and we feel very optimistic," Eraña said.
Bradesco (NYSE: BBD) and federally controlled Banco do Brasil (BB) together hold a majority stake in Cielo, and Itaú Unibanco (NYSE: ITUB) controls rival company Redecard, which had been closely associated with MasterCard (NYSE: MA) for many years. Both Cielo and Redecard are the two largest players in the industry by far.
Santander Brasil (NYSE: BSBR) has announced its plans to work with Brazilian IT products and services provider GetNet to build a competitor to Redecard and Cielo, while US-based electronic transactions and payment services firm First Data has also said it plans to get into the card market and assist other would-be competitors.
The market has been growing strongly over the last few years. According to Brazil's card industry group Abecs, transactions in the country's card business grew annually by 23-24% in the 2005-08 period to 375bn reais (US$206bn), with the number of cards in circulation growing at an average 15.3% annually in the same period to reach 514mn as of end-2008.