> For the complete documentation index, see [llms.txt](https://www.opensourcelaw.com.br/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.opensourcelaw.com.br/en/legislation/7.-brazilian-payment-system-law.md).

# 7. Brazilian Payment System Law

The law establishes powers for the Central Bank of Brazil to regulate payment arrangements, the establishment, authorization, operation, and supervision of payment institutions, among others.

## Definitions:

* **Payment Arrangement:** set of rules and procedures that governs the provision of a certain payment service to the public, accepted by more than one payee, through direct access by end users, payers, and payees;
* **Payment Arrangement Organizer:** legal entity responsible for the payment arrangement and, where applicable, for the use of the brand associated with the payment arrangement;
* **Payment Institution:** legal entity that, by adhering to one or more payment arrangements, has as its main or ancillary, alternative or cumulative activity: a) provide deposit or withdrawal services for funds held in a payment account; b) execute or facilitate payment instructions related to a certain payment service, including transfers originated from or destined for a payment account; c) manage a payment account; d) issue a payment instrument; e) accredit acceptance of a payment instrument; f) execute remittance of funds; g) convert physical or book-entry currency into electronic currency, or vice versa, accredit acceptance or manage the use of electronic currency; and h) other activities related to the provision of payment services, designated by the Central Bank of Brazil;
* **Payment Account:** record account held in the name of an end user of payment services used to execute payment transactions;
* **Payment Instrument:** device or set of procedures agreed between the end user and their payment service provider used to initiate a payment transaction; and
* **Electronic Money:** funds stored in an electronic device or system that allow the end user to carry out a payment transaction.

{% hint style="info" %}
Electronic money and virtual currency are not the same thing. See [Crypto Assets Legal Framework](/en/legislation/2.-legal-framework-for-cryptoassets.md).
{% endhint %}

{% hint style="danger" %}
Payment institutions are prohibited from carrying out activities reserved exclusively for financial institutions.
{% endhint %}

This Law does not apply to payment arrangements and institutions in which the volume, scope, and nature of the business, to be defined by the Central Bank of Brazil in accordance with parameters established by the National Monetary Council, <mark style="background-color:purple;">are not capable of posing a risk to the normal functioning of retail payment transactions</mark>.

## Principles:

* interoperability within the payment arrangement and between different payment arrangements;
* soundness and efficiency of payment arrangements and payment institutions, promotion of competition, and provision for the transfer of balances in electronic money, where applicable, to other payment arrangements or institutions;
* non-discriminatory access to the services and infrastructure necessary for the operation of payment arrangements;
* meeting the needs of end users, especially freedom of choice, security, protection of their economic interests, non-discriminatory treatment, privacy and protection of personal data, transparency, and access to clear and complete information about the conditions for the provision of services;
* reliability, quality, and security of payment services; and
* financial inclusion, observing equivalent quality, security, and transparency standards across all payment arrangements.