BC receives proposals to limit revolving term and repay debt – 11/09/2023 – Market

The Central Bank received new proposals from Abranet (Brazilian Internet Association), which represents part of the card machine companies, and from Abecs (Brazilian Association of Credit Card and Services Companies) to discuss the model and rates of the rotating, according to Paulo Solmucci Júnior, executive president of Abrasel (Brazilian Association of Bars and Restaurants), who participates in the meetings.

The alternatives were presented by entities that participated in the second meeting on the topic, held on Tuesday (7), in São Paulo.

According to Sheet found, Abranet suggested that the overdue credit card bill can be repaid in installments, adding to the bill for the following months, with lower interest rates than the revolving one.

The entity would have presented data showing that default is not the result of installments, but rather the increase in credit offered, especially for the low-income population.

Abecs would have raised the possibility of shortening the period that a customer who does not pay the invoice remains on the rotating system, which is currently 30 days. Thus, the outstanding invoice would remain under the effect of this interest for fewer days, which is currently at 441.1% per year. However, the new deadline has not been defined, but the BC must study simulations with different periods ranging from five to ten days.

Abipag (Brazilian Association of Payment Institutions), in turn, presented studies carried out by professors from USP and PUC that indicate that interest-free installments are not related to an increase in credit risk.

When contacted, Abranet, Abecs and Abipag did not respond until the publication of this report.

On the other side, there is Febraban (Brazilian Federation of Banks), which presented data that goes in the opposite direction of this line of argument.

The entity argues that interest-free installment credit can be made in up to six installments, in order to reduce the risk of issuing banks, which, according to the entity, could charge less in the revolving loan.

One of the problems raised at the meeting is that consumers have started to have many cards in recent years, without issuers having access to competitors’ information regarding credit granted to the same person, which makes it difficult to analyze limit granting, for example .

The president of the Central Bank, Roberto Campos Neto, would have committed to studying in detail and carrying out simulations of all proposals and taking the data to a next meeting, with no date yet set.

Entities have until the end of December to reach self-regulation in relation to revolving interest. Otherwise, the Desenrola law rule will come into force, limiting this fee to 100% of the amount due.

The first meeting between payments sector representatives took place in October. The initial proposal raised by the BC at the time was to limit interest-free installments to 12 installments, initially. The limitation could be progressive, going to nine, and then six months.