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When the Brazilian payment apps multiply, some to warn of a shakeout

SAO PAULO (Reuters) – Banking apps are supported by the SoftBank Group Corp, China’s Tencent Holdings Ltd., and others, are proliferating in the country, with a dizzying array of choices that will continue to say it is a shakeout seems to be becoming more and more necessary.

FILE PHOTO: The logo of Nubank, a Brazilian FinTech startup, is pictured at the bank’s head office is in Sao Paulo, Brazil on June 19, 2018. REUTERS/Paulo Whitaker/File Photo

Customers will be able to shop, open a no-fee checking accounts, and loans using the digital wallets of retailers, such as Lojas Americanas, e-commerce platform, Mercadolibre Inc., and even a small football team in T.

Brazil has over 50 million digital-wallet accounts are offered by more than 100, according to some estimates.

These apps are a challenge to the dominance of the first wave of online banks, such as the SoftBank-backed Bank Inter SA, and the Tencent-backed Nubank, if they’re trying to grab a piece of Brazil and 9.4 billion reais ($2.24 billion) of the bank’s assets.

The wave of start-ups are in part the result of the central bank of any changes in the laws and regulations aimed at encouraging competition in the banking sector, in which the five leaders, and hold a total of 82% of the total assets. The impact of the new competition, it may also assist in the creation of the financial services to the approximately one-third of the brazilian people with no bank accounts.

The changes, which pose a threat to the huge profits of brick-and-mortar banks, such as Itau Unibanco Holding SA and spain’s Santander. But with the plethora of new entrants can make profits more elusive, the more specialized fintechs, the force of the a to the merger and the other people.

On Friday, another one of the Brazilian retailer, Magazine Luiza, has said that the planned launch of an application, based on the portfolio in January, in conjunction with the state-run lender Banco do Brasil SA for the money. This was as a result of an announcement by the mobile operator, TIM icipacoes SA, which it plans to launch a similar service offering in the first half.

“That is a convincing answer to the question of how they are going to make the company profitable,” said Raul Moreira, director of technology at Banco Original, and is one of the more established online banks, according to the later payment, such apps.

Nonbank firms tend to have more complex products such as loans, in conjunction with the traditional lenders.

The increase in the current accounts of the banks challenge of the online banks will have to learn about risk management from scratch, as said by Luis Ruivo, head of financial services at PwC Brazil as a unit.

While the retailers’ finance arms, can juice up profits, their priority is to keep the customer’s loyalty, and they are under less pressure to turn a profit, then the digital, this, like Nubank, Banco Original and Banco Inter, ” he said.

“Online banks are created to meet the challenge of the big banks, but they have been challenged by a variety of different players,” Ruivo said.

Bank, the Inter is an exception among digital sellers, such as it is, it is profitable, and has a full banking licence with the audit of the accounts, subject to the capital requirements regulations.

“Many of the new entrants are growing quickly, because consumers don’t get the difference between a digital wallet and checking accounts,” said Bank, the Inter Chief Executive, John Victor Argue. “In the near future we will see a lot of people do stupid things.”

Even a small, football-team, T,, which was kicked off in the brazilian first division last month after a weak season, which recently launched its private banking unit to provide financial services to its estimate, over 500,000 fans around the world.

Writing by Carolina Mandl; Editing by Richard Chang and Christian Plumb

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