The stimulus package for the economy announced by President Michel Temer and Finance Minister Henrique Meirelles may have the opposite effect on small credit card issuers such as Nubank.
One of the measures being studied foresees the reduction in the deadline for the transfer of the money on purchases made by credit cards to the retailers from 30 days to only two days. The idea is to make the economy spin with an injection in the cash flow of retailers.
When a purchase is made on credit card, retailers are normally paid 30 days after the operation, much longer than in other countries. However, the move should increase costs for all credit card issuers in the market.
“Currently, a customer who uses their card will pay the invoice, on average, 26 days later. Thus, Nubank, as issuer, will receive the money only after this deadline, “explains Cristina Junqueira, co-founder of the company, to newspaper Estado de São Paulo.
“With the money, we pay the acquirer – card operator – which takes another two or three days to pay the retailer. That gives the deadline of 30 days, ” she details.
Large banks, such as Itaú and Santander, have financing power to support change without major problems. Nubank, which works only as a card issuer, can not afford the loss.
The service, which has issued more than 1 million cards since 2014 and has a long queue, has as its main source of revenue a 5% charge on each purchase – no user fees are charged. The majority of it is destined to the purchasers (Cielo, Rede) and the flags (MasterCard and Visa), while the issuer pockets about 1.5%.
The business model leaves Nubank exposed to the slightest change in the rules. According to Cristina, if the deadline is shortened to two days, as it has been proposed, business will close the doors the day after its publication in the Official Gazette. If the reduction is less drastic, for 15 days, the company would need the immediate contribution of R$ 1 billion to guarantee the pass-through to retailers.
The official announcement with the rules changes is expected to be announced on Tuesday (20) by Central Bank President Ilan Goldfajn. According to analysts, in addition to independent card issuers, small acquirers may also terminate activities if the change is confirmed.
According to the State’s calculations, the deadline for payment to retailers is still being studied by the economic team. One of the alternatives is the interest rate change of the credit card, maintaining the deadline of 30 days for payment to retailers.