Global accounts increase services to attract customers – 06/04/2023 – Market

Spending by Brazilians with cards abroad has increased rapidly in recent months, in the wake of the gradual resumption of travel after the most acute phase of the pandemic.

Data from Abecs, an association that represents companies in the electronic means of payment sector, show that spending by Brazilians with cards abroad reached US$ 2.72 billion (R$ 13.47 billion) in the first quarter, an increase of 53% compared to the same period last year.

When compared to the first quarter of 2019, the period before the pandemic, growth was 23.6%.

To make purchases with cards in other countries, an alternative that is increasingly sought after by Brazilians are the global digital accounts offered by banks and fintechs.

Over the last few years, the offer of these accounts by new companies in the financial sector has increased significantly. One of the main advantages offered that has attracted more and more interested parties is the reduction of costs.

Global accounts have a common practice of offering a reduced taxation of 1.1% of IOF (Tax on Financial Operations) on purchases made abroad, compared to the rate of 5.38% for international purchases with a credit card issued in Brazil . The reduced rate occurs because the operation is configured as a remittance to an account of the same holder abroad.

In order to attract new customers in the midst of fierce competition, which includes the arrival of companies such as the British Revolut and investments from giants such as JP Morgan and Itaú, digital banks and fintechs have increased the offer of services.

Nomad installments purchases in dollars up to nine times

With a base of around 1.5 million users, fintech Nomad announced on May 10 the start of the installment service for amounts transacted in dollars. The minimum amount to be paid in installments is US$ 100 (R$ 496.41), and purchases can be divided into three, six or nine installments, with a variable installment rate.

Although installments are common in Brazil, it is rare abroad for companies to accept this form of payment. The financial startup allows the purchase in installments from credit cards issued in Brazil. The establishment abroad receives the amount in cash using the Nomad debit card.

“A differential is the exchange rate we use. We close with the commercial dollar, which has a lower price than tourism, used by banks and exchange offices”, says Caio Fasanella, investment director at Nomad. The fee charged from the user has a margin of up to 1% over the market price. The user can buy the dollar at the time of closing the purchase, either in physical stores or online.

“If you consider that, on the credit card bill, the banks charge a spread of up to 7% over the official tourist dollar, and the difference in the IOF, the savings for the consumer can reach 10%”, says the Nomad executive .

Fasanella also claims that, by keeping the money in the international account, the user already diversifies his investments. “He is already putting part of his equity in dollars. Most of our clients have this more conservative profile. But the account opens up the possibility of investing in American assets, such as Treasury bonds and stocks.”

After the contribution from Itaú, Avenue plans to launch accounts in euros and pounds sterling

At Avenue, which offers banking and investment services to Brazilians abroad through a dollar account, plans are also underway to start offering digital accounts in euros and pounds sterling.

Alexandre Artmann, executive director of operations at the company, says that the plans to expand the offer came in the wake of the investment made by Itaú in 2022, which significantly expanded the base of high-net-worth clients.

The executive adds that, in addition to the debit card already offered, the launch, in the medium term, of a credit card abroad, which will allow customers to make purchases in installments, is also part of the business’s strategic planning.

Avenue currently has around 700,000 customers with an equity base of US$ 2.5 billion (R$ 12.4 billion). The company’s goal is, by the end of 2025, to reach the mark of 1 million customers and US$ 10 billion (R$ 49.6 billion) in resources.

“The demand [dos clientes] It’s too strong. In the beginning there was a lot of word of mouth, and with the [investimento do] Itaú, the demand really exploded, with a strong investment in marketing”, says Artmann.

The executive says that the Avenue customer has a profile similar to that of the Personnalité area of ​​Itaú, which requires an income from R$ 15,000. These are people who make recurring trips abroad and want to keep a portion of their equity in hard currency, says Artmann.

C6 launches global dollar and euro accounts for PJ clients

The digital bank C6 Bank, which has been offering individual customers accounts with a balance in dollars since the end of 2019, and in euros since December 2020, started to offer, as of February and April of this year, respectively, accounts in both currencies. also for corporate customers.

With the service, companies can pay expenses and carry out transfers in dollars and euros abroad, in addition to carrying out exchange operations 24 hours a day, says Maxnaun Gutierrez, executive responsible for the area of ​​products at C6 Bank.

The IOF (Tax on Financial Operations) is 1.1% on remittances and 0.38% on remittances returned to Brazil. Operations use the commercial exchange rate with a spread of 2% and 2.5% for the dollar and the euro, respectively, on transfers during business hours.

“We believe that we already have a very complete offer, both for individuals and for legal entities and also in the part of investments”, says Gutierrez.

He says that the company’s objective since the beginning of its activities has been to offer services to the general public, which until then had been restricted to private banking clients only.

According to Gutierrez, the main demand of customers who open a global account at C6 is still to travel abroad, but he also notes a growing interest in investments, especially with the rise in interest rates carried out in recent months by the Fed (Federal Reserve, US central bank) that boosted global fixed income returns.

The executive says that, with the entry of JP Morgan, which bought 40% of C6 in 2021, the American bank contributed its expertise to offer investment products to customers, who can buy fixed income securities issued by both C6 and by the American bank abroad.

C6 does not open how many customers have global bank accounts. Just that there are 20 million customers, between accounts in Brazil and abroad.

MP on taxation of investments abroad will be closely monitored by the sector

The executives say that the processing of MP (Provisional Measure) 1,171, presented by the government in May, which deals with the taxation of investments abroad, will be closely monitored.

Until then, investments made by individuals abroad were subject to taxation according to the progressive table, with a rate of up to 27.5%. With the MP, if approved, the maximum rate for income obtained from investments abroad will be 22.5%.

However, if before taxation only occurred with the distribution of profits, now there will be an Income Tax requirement at the end of each year, based on the total profits earned in the period, explains Diogo Olm Ferreira, tax lawyer at VBSO Advogados.

“Despite the reduction in rates, there is potential for an increase in taxation. After all, the tax that was previously due only when profits were distributed, will now have to be paid annually”, says the expert.

Artmann, from Avenue, says that it is too early to make an assessment of the MP’s impact, since it may still undergo changes in Congress until its final approval.

In any case, he says that this is a measure that was already on the sector’s radar. “They had already tried to approve this measure during the administration of the [Paulo] Guedes still with the [ex-presidente Jair] Bolsonaro. It was already something we thought was going to happen at some point,” he says.

He adds that the only concern is that the measure is well planned, leaving no room for arbitrage or misinterpretation. “The biggest concern is that everyone understands the rules of the game.”

Gutierrez, from the C6, says that a point of attention on the MP concerns a possible taxation that would focus on gains resulting from the appreciation of the dollar. But that “what we have for now are hypotheses that have not yet been deeply discussed”.