Interview

Paybrokers COO Carlos Klein spoke with Payment Expert to dissect Brazil’s regulations when it comes to payments in the sports betting and igaming framework. The Pix system is unique to Brazil and consequently, Klein stresses the importance of having local knowledge to succeed in the market.Finally, Klein explains how the Brazil-based payment provider can help operators navigate the regulatory system while helping customers have a seamless experience. How exciting is the opportunity of entering and servicing the regulated Brazilian market for Paybrokers? As a leader in our iGaming payments industry, we are thrilled with the opportunities arising from our new regulated market. Brazil boasts a young, digitally savvy population with a strong affinity for gaming. The annual spending on online casinos and bookmakers based abroad is estimated at approximately BRL 2 billion, potentially reaching BRL 10 billion. Compared to developed markets, we estimate there’s a huge growth ahead when we think of GDP participation. We are in a privileged position to capture payments and banking services through the whole value chain and expand our offer to cover new obligations arising from the regulation. We will become an even more relevant services provider to the industry. Looking at the regulations of the framework, what benefits can the use of Pix bring from a regulatory and operational standpoint? Pix is a must and a great success case in the Brazilian market. Companies cannot think about operating in Brazil without it. It is a cashless payment method, which helps screening and monitoring customers and transactions. Its immediate settlement turns the customer journey into ready-to-play very quickly. Its recon structure is easier than other payment methods available in Brazil too. On the contrary, what challenges and issues does the Brazil Central Bank’s instant payment method bring? While there are many benefits, its structure and providers may experience some latency and that prompts the user to premature contact with support channels. Also, it is common that users mistakenly reclaim transactions back upon fraud allegations when in reality it is just a commercial disagreement or a desperate measure to get money back after losses. What compliance-based issues are operators likely to face in Brazil and how can Paybrokers’ payment platform help to solve these? We are still to see the full regulatory demands from the law and those arising from the Central Bank after them. We can say that KYC is a challenge in Brazil, mainly due to 27 different ID models and a fraud detection that is around 2.5 times bigger than the experienced in the European market, for example. Due to historic reasons, it is a marginal market in Brazil, in a sense that it is associated with illegal activities and suffers a lot of restraints from the incumbent financial system. That may lead to difficult relations with the main banks in Brazil and an increased scrutiny from authorities and the Central Bank. We will address compliance services and that can help our operators to best deal with all the customer identity, fraud, payments and banking issues. What technological developments are helping to ensure that operators can remain compliant with payment regulations and how is Paybrokers best suited to help them? As regulatory scrutiny intensifies, compliance becomes paramount for iGaming operators. Stricter standards demand robust Know Your Customer (KYC) protocols, anti-money laundering measures, and data protection. Responsible gambling practices gain traction, emphasising harm prevention and player well-being. Paybrokers’ commitment to compliance ensures operational excellence while safeguarding players. ID management and fraud prevention is a flourishing market in Brazil as new players are creating AI-based solutions and working on assuring the biometrics requirements by law at low cost and great efficiency. We can collaborate with our expertise and help to orchestrate relevant services into one fluid experience to support our operators. Also thinking on bank services through the whole value chain provides a wider understanding on transactions behaviour and potential misuses. How will Paybrokers apply its experience of payments in Brazil to help boost your standing in the market? Paybrokers is working on providing increased performance in terms of stability and conversion rates and expanding towards offering financial compliance and complimentary services that will help our operator to land in Brazil. We will reduce the overall costs of collections and settlements when the operator encompasses its relations within our full ecosystem banking solution. What are the major payments and KYC considerations operators should keep in mind when entering Brazil? We used to say that “Brazil is not for amateurs” when we refer to how hard it is to localise operations for foreign companies. It is usual to find some sorts of requirements or business structures that are not intuitive and are very distinctive to our market. We would say that it is a must to have a local team dealing with business partners and authorities. Be aware of a higher fraud and misconduct in regular operations. Also remember that there’s little-to-no expertise on this segment in Brazil and that it’s been illegal for a long time and thus expect strong prejudice from regulators and some segments of Brazilian society.

PayBrokers is one of the most important payment methods firms in the iGaming sector in Brazil. However, it has expanded and obtained a license to deploy a complete service platform for sports betting in the state of Paraná, in partnership with Skilrock. In an exclusive interview with GMB at G2E Las Vegas, CEO Edson Lenzi reveals that the company is in the integration phase with operators and believes that the state’s operation will be fully operational by the end of the month. GMB: How has your participation been here at the Global Game Expo, and what are your expectations for this trade show? Edson Lenzi: G2E is one of the most important trade shows in the global market, and it extends beyond the traditional markets we typically work in, helping us attract clients to bring to Brazil. We also see opportunities here in the regulated American market and other international operations. So, we view this trade show very positively. It’s our first time exhibiting here, and we are experiencing significant interest. All the global players are here, which is great for positioning ourselves in this market. Since you are eyeing the Brazilian market, there’s nothing better than talking to someone who understands, right? In this case, PayBrokers. Exactly. Our solution is aimed precisely at serving international companies exploring the Brazilian market. So, our clients are here. Have you noticed more clients due to your participation in the Global Gaming Expo? I believe so. We’re still on the second day, and we haven’t formally finalized any contracts yet, but many contacts from previous trade shows and such end up coming here, and the initial discussions happen. We’ll have to wait for the actual contract signings, but we view this very positively. This will allow us to convert these interactions into business and bring more operations to Brazil. PayBrokers is not just a payment methods company, as it now owns the platform that will start operating sports betting in Paraná in the coming days. Could you tell us a bit about how this process has been and how the pre-start phase is going? At Lottopar, we won a tender through the PayBrokers consortium, which is a combination of the PayBrokers system and Skilrock’s lottery management system. This contract was signed a few months ago, and the state has already accredited the actual operators. We are in the integration phase with the operators, and we believe that by the end of the month, the operation in the state of Paraná will be running at full capacity. What does the PayBrokers and Skilrock platform encompass? It includes a lottery management system where all transactions made by operators are automatically visible to Lottopar. This provides a high level of security for the state and the regulatory entity. In addition to this system, we have the payment solution, which is where our main expertise lies, handling the actual financial operations for deposits and withdrawals for the operators. With this, we can provide much greater security to the state, the operators, and the population in terms of the operators’ financial liquidity, responsible gaming, self-exclusion, anti-money laundering, and counter-terrorism financing. There are a set of rules already integrated into this system, ensuring the state adheres to legality and the best global practices in this niche market will be applied at Lottopar. With such a comprehensive platform and a payment methods company specialized in the Brazilian market, does it all come down to market and regulation now? We’ll have to wait and see how things unfold. Regarding regulation, we understand that some aspects deserve better emphasis, analysis, and discussion, but we know that everything is in good hands and will be thoroughly examined. The law has been officially published, and we hope these points will be carefully considered. The Senate has also presented several amendments, so it will likely return to the Chamber of Deputies. We’ll see how this progresses until the end of the year, and we’re always available to provide clarification and assistance as needed. From the perspective of financial transactions, you are already experts, and the provisional measure that has become the bill now in the Senate even foresees the action of the Central Bank for accreditation and licensing of companies that will handle financial intermediation. Are you ready for this? Yes, we are ready. Within our corporate group, we already have other companies that meet these requirements. Of course, not for Central Bank accreditation because the rules haven’t even been disclosed yet. But as soon as the rules are published, we are confident that we can comply with them because we believe these rules will be similar to what states are already implementing and will be international standards. We do not anticipate any restrictions on competition in the national market, leading to the exclusion of any players, whether in operator accreditation or payment processing. What are PayBrokers’ plans for the very near future that is approaching? We have the Payment Institution with direct connection to the Central Bank’s PIX system, and the entire infrastructure is ready for when regulation happens. When the market is regulated, we will be ready for it all. We will try to position ourselves in the best possible way to continue serving the operators, which are our main focus.