New Development: In Brazil, More Cross-Border Credit Card Transactions will be Declined

By: Wade Pylka

According to recommendations of the Brazilian Central Bank, some Brazilian issuing banks are informing merchants and end users that credit card transactions made through foreign websites or international stores in Brazilian Real (BRL) will be declined starting in September 2013. The move to decline cross-border transactions in BRL started by Banco do Brasil was reinforced by Bradesco and Itaú (the three largest banks in Brazil). Itaú started declining cross-border transactions on Sept. 30, 2013. Other banks may follow suit.

Although this new development complicates transactions in BRL, cross-border purchases can be made in U.S. dollars, Euros and other currencies.

What is the impact?
The only way to prevent cross-border transactions from being declined is to present authorization requests and settle transactions in the currency where the merchant is located (USD, EUR, CAD etc.). For example, a U.S. merchant would need to authorize and settle transactions in US dollars.

Please note that for transactions executed in foreign currency and any cross-border transactions, the cardholder will be charged a Financial Operations Tax (IOF) of 6.38% directly on his or her bank statement.

Three potential solutions for merchants

  1. If a merchant is not locally processing in Brazil, remove the ability to transact in BRL on their website and have Brazilian customers transact in another currency.
  2. Route traffic to a local acquiring bank (when possible), some of Digital River’s merchants have done this successfully.
  3. Continue to transact in BRL and face potential increase on declines and poor user experience.

How Digital River can help

  • Digital River has established gateway solutions and local relationships with main acquirers in Brazil. Without a local entity in Brazil, the merchant would be unable to offer these gateway services.
  • Merchants can leverage Source Brazil, a customized outsourcing strategy for fully managed global payments, which provides complete local compliance where Digital River acts as the reseller for merchants that sell electronic digital software.

If you have any questions about this new development in Brazil, please leave a comment or e-mail us at

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