Digital financial institutions, called the fintechs, were authorized to receive Federal Revenue Collection Documents (DARFs) for the payment of taxes from January 2021.
The decision is contained in Ordinance No. 13 of the Ministry of Economy, of January 13, 2020, provided for the accreditation of financial institutions to provide federal revenue collection services.
The measure eliminates a relevant competitive barrier to fintechs, previously prevented from providing this service to their customers, who also needed to be account holders of traditional financial institutions to collect DARFs.
In this article, we will outline the conditions for application of this new measure, and how it impacts the banking sector and customers.
About the brazilian fintechs
Fintechs are companies that introduce innovations in the financial markets through the extensive use of technology, with the potential to create new business models. They operate through online platforms and offer innovative digital services related to the sector.
In Brazil, there are several categories of fintechs : credit, payment, financial management, loan, investment, financing, insurance, debt negotiation, foreign exchange, and multiservices.
Two types of credit fintechs may be authorized to operate in the country – for intermediation between creditors and debtors through negotiations carried out electronically: the Direct Credit Society (SCD) and the People’s Loan Society (SEP), whose operations will be included in the Credit Information System (SCR).
Personal Loan Society (SEP)
SEP carries out credit operations between people, known in the market as peer-to-peer lending. In these electronic transactions, fintech intervenes in the relationship between creditor and debtor, carrying out a classic financial intermediation operation, for which they can charge fees. Unlike SCD, SEP can raise funds from the public, as long as they are entirely and exclusively linked to the loan operation.
In this case, fintech acts only as an intermediary for the contracts between creditors and credit borrowers. The resources are from third parties that only use the infrastructure provided by SEP to connect creditor and borrower. In this type of operation, the exposure of a creditor, per SEP, must be a maximum of R $ 15 thousand.
Additionally, SEP can provide other services such as credit analysis and collection for customers and third parties, and issuing electronic money.
Potential recipients of loans must be selected based on criteria such as economic and financial situation, degree of indebtedness, sector of economic activity and punctuality and late payments, among others.
Direct Credit Society (SCD)
SCD’s business model is characterized by credit operations, through an electronic platform, with its own resources. That is, this type of institution cannot raise funds from the public.
Your potential customers should be selected based on consistent, verifiable and transparent criteria, considering relevant aspects for assessing credit risk, such as economic and financial situation, degree of indebtedness, ability to generate results or cash flows, punctuality and delays payments, sector of economic activity and credit limit.
In addition to carrying out credit operations, SCDs can provide the following services: credit analysis for third parties; collection of credit from third parties; distribution of insurance related to the operations granted by it through an electronic platform and issuance of electronic currency.
The Payment of federal taxes by Fintechs : the impact on the banking sector & final customers
The new ordinance (No. 13 of the Ministry of Economy, of January 13, 2020) provides for accreditation of Fintechs, so that they can start accepting the payment of bills for services and federal taxes.
This new ordinance, in addition to making life easier for many customers who have digital bank accounts, helps to increase competitiveness between traditional financial institutions and the well-known fintechs. With these changes and the high investment of many institutions, traditional banks will need to prepare for tougher competition.
The ordinance changed a rule whereby only financial institutions – traditional banks with physical customer service networks – could provide federal tax collection services through payment of federal revenue collection documents (DARFs) by taxpayers.
Now, 100% digital institutions will also be able to receive DARFs. Thus, a customer of a fintech will now be able to pay their DARFs through their account at fintech itself.
The truth is that there are currently several new financial institutions, which work entirely with online services, but equating with traditional institutions, still have many limitations, due to the lack of legal definitions who break these barriers.
In addition, with better defined legal issues, the domestic market will be prepared to receive other fintechs, such as the one that was acquired, for a billion dollar amount, by Visa.
With the novelty, customers who have digital bank accounts will have an easier time paying their taxes, since it will not be necessary to withdraw the required amount or transfer to another institution, and can do everything with a few clicks, in the bank application that they use the most.
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