Brazil meal payments overhaul delayed by central bank standoff

FILE PHOTO: Stickers of meal vouchers companies are pictured on the entrance door of a coffee shop, in Rio de Janeiro, Brazil March 28, 2023. REUTERS/Ricardo Moraes

BRASILIA (Reuters) - Fresh competition in Brazil's lucrative meal voucher market must wait, according to people familiar with discussions between the Finance Ministry and central bank, which disagree about how to regulate a new system in time for its scheduled launch in May.A law passed in September under former President Jair Bolsonaro allows workers to move their meal credit between providers and spend it at any participating restaurant. But under new President Luiz Inacio Lula da Silva, government efforts to regulate such a "portable" and "interoperable" system have stalled.Tech companies including the financial services arm of Mercado Libre and meal delivery company iFood expect the rules to let them take a bigger bite of a nearly 150 billion reais ($29 billion) market dominated by a handful of companies. More competitive options for tens of millions of Brazilians spending their employer-provided meal vouchers may dent profit margins for Sodexo and Edenred subsidiary Ticket. Sodexo got 26% of its operating revenue from Brazil last year and Edenred got 22%, according to investor presentations. The Finance Ministry says the central bank has jurisdiction to regulate payment systems, but sources said the central bank resisted early proposals to shake up the market and sought to keep its hands off the segment.

The bank's staff believes the voucher market presents no systemic risk. The bank has also said transferring voucher credits could actually hurt competition, creating new barriers to entry by requiring substantial investments in operations, according to two people familiar with the discussions.