July 13, 2020 / 7:42 PM / in a month

Brazil central bank must adapt regulation to big tech companies, director says

FILE PHOTO: The central bank headquarters building is pictured in Brasilia, Brazil November 27, 2019. REUTERS/Ueslei Marcelino

SAO PAULO (Reuters) - Brazil’s banking regulation must adapt to big technology companies to ensure competition in the financial arena, central bank director Joao Manoel Pinho de Mello said on Monday in a webcast with newspaper Valor Economico.

In June, the central bank issued a rule saying it could require market participants to receive prior approval to operate in payments. Simultaneously, it suspended the newly launched WhatsApp payment service by Facebook Inc (FB.O) in Brazil.

Mello’s statement underscores that the central bank may soon issue new rules for big tech companies, such as Facebook, Amazon.com Inc (AMZN.O) and Alphabet Inc’s (GOOGL.O) Google.

“The regulation must adapt for the new times,” Mello said. “Big techs may induce competition, but we must ensure they will.”

The main concern, he said, is that tech companies already start big as they have millions of users, which could force some merchants, for instance, to adopt a service because clients will demand it to make payments.

After suspending WhatsApp’s payment service June 23, the central bank is analyzing if the service can operate safely in terms of data protection and competition. WhatsApp has roughly 120 million users in Brazil.

Reporting by Carolina Mandl; Editing by Leslie Adler

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