Retailers try to delay new rules for online marketplaces

Large operators of online marketplaces are trying to delay the implementation of a new Central Bank rule for payment settlements that will directly affect their business.

The Central Bank (BC) decided that from September 4th on, these companies’ entire flow of payments must be settled at the Interbank Payments Chamber (CIP), which is already responsible for most of the banking transactions in Brazil. Marketplace operators claim this may cut into their margins by reducing financial revenues and adding operating costs.

By the rules defined, all companies that operate in the online marketplace chain must be registered and certified at the CIP. And they will be required to settle their transactions within the chamber’s system. It has been said that because the Central Bank is concerned about the systemic risk that such marketplaces may pose to the market for the growing volume of transactions. Retailers that operate these marketplaces are the ones that transfer to the merchants, marketplace customers, the amount of the purchase made by the consumers.

Online marketplaces operate like virtual malls, with merchants having their operations hosted by the websites of chains such as Casas Bahia and Americanas.com, which charge a fee for that. At every sale, the big chains get the amount and split the values. Part goes to the merchant who sold the good and part is kept by the marketplace operator — as much as 15%. Today, 25% of e-commerce sales in Brazil are sold by marketplace vendors, according to the Brazilian Association of Electronic Commerce (Abcomm) — that is likely to amount to about R$10 billion in 2017.

There is a series of impacts with the change that vary according to the type of deal. BC has requested companies last week to define these effects in a report and to hand it this week. One of the key issues — in addition to the need of discussing how to adapt to the requirement of settlement at the CIP — is in the financial effect of the measure. That is because the rule affects one of the online marketplace’s tripod.

It is the condition under which the retail chains that operate the online marketplaces make payment advances to the merchants. Currently, groups such as Via Varejo (which owns Ponto Frio and Casas Bahia) and B2W (Submarino, Americanas.com) offer this financial service, considering that they, as intermediaries, have access to the sales’ funds. This provides them with an additional income.

But merchants may also get advances from banks, and since the marketplace data are not visible to the market, it is not possible to know the real amount advanced to merchants. If this occurs, limits of advances through the marketplace may fall.Industry companies understand that the financial service is likely to be hindered by this.

Another expected effect has to do with the credit portfolios of collective-buying marketplaces. Since clients paid for services but don’t redeem them immediately, this credit was profit for the companies, as site Brazil Journal reported in an article last week on the new rule. With the centralized settlement, this ceases to exist.

There is a fear of imbalances in this new structure set up around online marketplaces. Since retail chains started to operate within the payment chain, if the chains (especially medium-sized ones) cease to pay merchants they host in their websites, or differ the payments, there is the risk of putting small merchants in a difficult situation.

At this moment, marketplace operators are evaluating how to adapt to the requirement. There are two possible alternatives: hiring a merchant acquirer or payment facilitator to handle these activities in their place (which have systems interacting with the CIP) or doing themselves the adjustment of the systems to settlement at the chamber. In this case, they will also need to use an intermediary certified to communicate with the CIP network — which could be a specialized company, such as RTM, or a bank.

The main issue is cost: spending on internal development or paying a third party? “The small will not manage [to develop]. It will have to use a third party. For a big one, looking into the medium run, depending on the volume, this becomes expensive [and it is better to develop],” says Maurício Salvador, with Abcomm.

In this format, marketplace operators initially hire merchant acquires such as Cielo, Rede and Stone or other payment processors such as MoIP and Aceita Fácil, which are certified to settle transactions at the CIP. At the same time, they will develop their own systems. Some have already started this work and are thinking of going beyond the connection to the chamber.

Mr. Salvador, with Abcomm, says the investment in such a system will depend on how the retailer’s technology environment is structured, whether it is compatible or not with the CIP requirements, and may reach some millions of reais.

The new rule for online marketplaces is a development of the regulatory framework for electronic payments of 2013. It was published in September 2015 and the deadline of September 4th for adaptation to the system was established in an order of December 2016. Discussions on how to adapt to it, however, only began about two months ago.

The Central Bank announced that the provision of payment services is an activity of public interest and therefore demands minimum conduct rules. “The BC also understands that the standardization brought by the implementation of centralized settlement will facilitate the exchange of basic information of payment transactions, information that all companies that participate in the flow of payment must hold.”

The BC also pointed out that the regulation for centralized settlement was made public in 2015 and that since December 2016 the deadline of September 4th was established. Also in the note, the BC said that the new rules aim to ensure gains of efficiency to the market and seek to end inefficiencies brought by the existence of multiple providers of settlement service. The BC also said it has been working to clarify the market agents and to evaluate if new measures will be necessary.

Source: Valor Econômico