As Brazil’s gaming market edges closer to regulation, the stage is set for payment providers like OKTO to make significant strides in one of the most eagerly anticipated sectors worldwide. Amidst the impending regulatory changes, companies vying for success in this burgeoning market must not only navigate legal complexities but also offer comprehensive financial solutions tailored to the industry’s specific needs. OKTO, drawing from its expertise in regulated markets across Europe and Latin America, is primed to address these challenges head-on, positioning itself as a pivotal player in Brazil’s gaming landscape. Leonardo Chaves, Country Manager for Brazil at OKTO, analyzes everything in this interview with SBC, covering the sports betting and igaming regulation in Brazil, OKTO’s U4C and the importance of authorization from Paraiba Lottery.

SBC: How big is the opportunity for OKTO to serve the Brazilian market as it prepares to launch one of the most hotly-anticipated markets in the world? 

LC: The Brazilian gaming market is on the brink of regulation, presenting a big opportunity for many tech providers whether for gaming, payments or other. The same applies also to OKTO. The important is how you handle this and how prepared you are.

There’s a clear pathway for companies within this sector to establish a legal presence in the country.

As the gaming industry gears up for legalization, companies will require more than just transaction processing – they need comprehensive financial solutions. They will require robust banking solutions, financial advisory, and strategic tax efficiency planning to navigate the complexities of the new regulatory environment.

OKTO is poised to fill this gap, leveraging our expertise gained from regulated markets in Europe and other regions of LatAm to tailor services for Brazil’s gaming sector. Our innovative solutions like Pay and Play and Pix Direct not only facilitate transactions but also enhance user experience and ensure regulatory compliance.

SBC: OKTO’s platform focuses on bringing some of the most advanced technology in the space. What specific products have you made available for Brazilian customers and why is OKTO the partner of choice?

LC:  OKTO’s platform in Brazil is at the forefront of technology, processing over BRL 2.5 billion per month with a success rate exceeding 99% for Pix in and Pix Out. The high performance underscores our reliability and efficiency in handling high-volume financial transactions.

Our comprehensive financial solution for businesses, is designed to cater to all the banking needs operators may demand upon establishing their presence in Brazil. This includes investment advisory and tax efficiency services, positioning OKTO as a holistic financial partner. As operators work towards establishing their presence in Brazil, OKTO provides essential services to facilitate this transition.

With offerings like Pay and Play and Pix Direct, we simplify user onboarding and streamline transactions. Our Pay and Play solution is designed to simplify the user onboarding and KYC process, integrating payment initiation with instant user verification. This innovation enhances the user experience, making it smoother for gamers to start playing without the traditional, cumbersome verification processes. In addition, Pix Direct addresses the specific needs of the Brazilian market by simplifying the Pix payment process. This solution minimizes the steps required for a transaction, aligning with the local preference for quick and efficient payment methods.

Furthermore, our KYC as a Service stands out as a unique offering, allowing clients to leverage OKTO’s infrastructure through a single integration. This service provides access to the necessary KYC services, easing the integration effort and offering cost benefits due to OKTO’s scale.

SBC: Looking at the regulations of the framework, what benefits can the use of Pix bring from a regulatory and operational standpoint? 

LC: According to the gaming regulations, only companies authorized by the Banco Central (Central Bank of Brazil) are permitted to offer services to gaming companies. OKTO is well-prepared to meet this requirement with a strategic acquisition in the country. U4C, now part of the OKTO Group, is a direct participant in Pix, facilitating banking services that align perfectly with the needs of the gaming industry and regulatory framework.

In addition, this acquisition enables us to expedite the development of additional functionalities that are outlined on Banco Central’s agenda for Pix, such as Pix Automático, a particularly beneficial function for the gaming sector, where transaction speed and reliability are paramount. Pix’s instant payment system offers real-time capabilities crucial for maintaining user engagement and trust, while also OKTO’s involvement ensures regulatory compliance and transaction integrity.

This arrangement enables greater control and security over transactions, which is critical in maintaining the integrity of financial operations within the gaming sector.

SBC: On the contrary, what challenges and issues does the Brazil Central Bank’s instant payment method bring?  

LC: While Pix offers significant benefits, it also poses challenges, particularly in security and regulatory compliance. Instant transactions demand robust fraud detection systems and ongoing vigilance to prevent fraudulent activities.

Additionally, the evolving regulatory landscape in Brazil requires companies to stay informed and adaptable to ensure compliance. This dynamic regulatory landscape can be particularly challenging for international companies unfamiliar with Brazil’s regulatory environment and OKTO remains vigilant in addressing these challenges to maintain the integrity and security of transactions.

SBC: What are the biggest consumer demands you have found in Latin America and are the demands of payment operators different from LatAm compared to Europe or North America?  

LC: The primary challenge in global online commerce lies in sales conversion, KYC (Know Your Customer) and completion of payment being the key friction points in the user journey.. KYC is crucial to prevent abuse and fraud,  while the payment process if not intuitively designed, can create insecurity for the customers. At OKTO, we prioritize user experience by tailoring payment solutions for each country to ensure the most suitable experience for every audience.

The customer journey extends beyond the point of purchase, emphasizing our commitment to excellent customer service across different countries. Although payment methods vary, our globally excellent service remains consistent, leveraging our global experience to offer locally customized services.

The demands of operators differ in Latin America compared to Europe or North America due to unique preferred payment methods and regulatory environments. Latin American consumers rely on a mix of traditional and digital payment methods, including cash-based systems, and now increasingly, instant payment systems like Pix in Brazil. In contrast, European and North American markets have a more established digital payment ecosystem, with a higher prevalence of credit card usage and growing interest in e-wallets and fintech innovations.

To address these differences, OKTO customizes payment solutions to match local preferences and regulatory requirements while maintaining a global standard of excellence in service and support. Our focus is on reducing friction in KYC and payment processes and enhancing the overall customer journey to meet the diverse consumer demands in Latin America and beyond.

SBC: OKTO authorized to process payments from Paraiba state lottery. How important is this in Brazil?

LC: Lotteries play a significant role in Brazil, both as entertainment and revenue sources for public programs social and cultural. The authorization to process payments from the Paraiba state lottery underscores the strategic importance of both compliant payment’s providers and lotteries in the Brazilian gaming and betting landscape. It highlights how these traditional forms of gaming are increasingly embracing digital payment solutions to enhance betting operations and user experience.

OKTO’s accreditation to provide services to operators licensed in Brazil is a pivotal development. This accreditation, achieved through OKTO’s U4C demonstrates OKTO’s commitment to complying with local regulatory requirements and its capability to meet the specific needs of the Brazilian market.  This not only positions OKTO as a key player in Brazil’s gaming industry but also sets standards for innovation and regulatory compliance in the evolving market.

LC: OKTO’s U4C stands out due to its advanced technology, compliance standards, user experience, customization, and strategic partnerships. Leveraging OKTO’s infrastructure, U4C offers seamless payment solutions that prioritize security and efficiency. Our focus on user experience, coupled with customizable solutions and strategic partnerships, distinguishes OKTO as a leader in the sector, capable of meeting evolving demands in Brazil and beyond.