Mastercard Seeks Deal Over Card Losses Left by Brazilian Bank Collapse

Mastercard is proposing to pay half the amount demanded by Brazilian merchant acquirers that were impacted by the collapse of Will Financeira, also known as Will Bank, a FinTech tied to the failed Banco Master, Bloomberg reported Friday (Aug. 14), citing unnamed sources.

In addition, Mastercard is proposing to provide the firms with services such as fraud protection for multiple years, according to the report.

The offer follows an earlier one that Mastercard offered amid the fallout of the collapse of Will Bank, the report said.

Mastercard said in the report: “We have been working through this situation closely with the liquidator and the regulator to minimize any potential impact on the payments ecosystem,” adding that it is waiting for another transfer from the liquidator. “That settlement will happen once when those outstanding funds are received from the liquidator.”

The January collapse of Will Bank left Mastercard on the hook to pay the equivalent of about $950 million to other parts of the network. Mastercard settled about half that amount but has been disputing the other half with the acquirers, according to the report.

Mastercard said it was required to pay for bills due the month after Will Bank’s liquidation, while acquirers argued that it is responsible for the full amount, per the report.

It was reported in November that Brazil’s central bank halted the operations of Banco Master and named a liquidator to handle creditor claims and sell assets. On the same day, police arrested the bank’s controlling shareholder.

Banco Master had struggled for months with liquidity pressures after growing rapidly by selling high-yield debt through investment platforms.

It was reported in May that Mastercard was asking some of Brazil’s largest payment processors to pay half the cost of its losses from the failure of Banco Master and its FinTech, Will Bank, which issued cards that used Mastercard’s network.

At the time of that report, Mastercard had paid about half the losses and was proposing that before it passes along more funds to those acquirers, it uses money collected from card customers to reimburse itself.

Brazil’s central bank had adopted new rules that make payment networks responsible for ensuring payment of all transactions to the receiving user, but Mastercard told merchant acquirers that it should not be bound by those rules in the case of Will Bank because the FinTech collapsed in January, and card firms had until May to adapt to the new rules.