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M&A Transactions in the Payments Market (Brazil)

Pedro Eroles, Marcus Fonseca, and Júlia Viana


  • Brazil's Payments Law, No. 12,865, enacted in 2013, governs the regulation landscape and spurred proliferation of fintechs and M&A activity.
  • In Brazil, between 2016 and 2021 an average of 154 fintechs emerged annually, with credit and payment methods being prominent categories.
  • Traditional financial institutions acquire fintechs to expand business or improve technology infrastructure, while national and international players acquire established institutions to enter the Brazilian payments market quickly.
M&A Transactions in the Payments Market (Brazil)
Erik Isakson via Getty Images

A decade ago, on October 9, 2013, Brazil enacted its Payments Law, Law No. 12,865, which regulates the general principles and rules applicable to the Brazilian Payments System and establishes essential concepts for the structure adopted in the scope of Brazilian payments, such as payment schemes and payment institutions.

Financial regulation in Brazil can be considered one of the most innovative in the world. Law No. 12,865 – together with the advantages of new technologies - has contributed to this innovative scenario by promoting digital financial inclusion, providing benefits to consumers, and fostering innovation and competitiveness within the payments market, creating opportunities for society by facilitating access to new financial products.

Law No. 12,865 brought legal protection to the Brazilian Payment System by improving the legislative framework and allowing payment institutions (not considered financial institutions) to offer payment services through instruments used in Brazil specifically for this purpose. The Central Bank of Brazil has supervisory powers over the Brazilian Payment System and has taken a proactive approach to fostering competition, reducing regulatory costs (at least in the early years of Law No. 12,865) to enable the entrance of new players in the once-concentrated payments market.

Such legal innovation has resulted in a proliferation of local fintechs and the creation of different business models in Brazil. According to the Fintech Report published by Distrito, between 2016 and 2021, an average of 154 fintechs emerged per year, and, among the 1,289 start-ups analyzed, the credit category stands out, followed by payment methods, back-office activities, digital services, and technologies such as cryptocurrencies and investments.

Over the years, the Central Bank of Brazil has gradually raised regulatory costs for payment institutions. However, it has done so without losing sight of the purpose of allowing innovation and competition, and the Brazilian market remains one of the most innovative in terms of new business and the creation of financial products. This has allowed players (incumbents and entrants) to prosper, resulting in a trend of consolidation and triggering a robust internal movement of mergers and acquisitions of fintechs operating in this market.

The reasons for M&A deals are many, and it is possible to identify transactions that involved traditional financial institutions acquiring new fintechs to expand their business or improve their technology infrastructure, or even national or international players that acquire already consolidated institutions in Brazil as a faster route to enter into the Brazilian payments market. Implementing an M&A-based expansion strategy in the financial institutions and services sector is also intended to remedy shortcomings and fill gaps to offer increasingly suitable solutions to customers.

Between January and June 2023, 661 M&A transactions were announced in Brazil. The financial institutions and services sector is the second largest in transaction volume (14.8%) after the technology sector, which leads with 17.5% of transactions. The same report highlights that M&A opportunities continue to arise, particularly the activity of strategic investors, and it is expected that the number of transactions, which was announced to be 1,600 transactions during the year, will be maintained.

October 2023 was the first month since June 2022 to show growth in the accumulated total, with 1,516 M&A transactions in the last twelve months. In October 2023, 133 transactions were carried out, an increase of 5.6% compared to October 2022 and an investment of BRL 25.3 billion. Therefore, the Brazilian mergers and acquisitions market holds a range of opportunities corresponding to the expansion of financial and payment services in Brazil.