The largest independent brokerage in Brazil, XP, has just launched its international digital accounts. The launch aligns XP’s offer with competitors such as Itaú’s Avenue, Bradesco, and Inter, which already operate this type of account to attract high-income customers who invest or want to invest in the U.S.
XP, also licensed as a bank, partnered with Mastercard to offer a debit card that is functional in 210 countries and linked to a U.S. dollar-denominated account.
As The Brazilian Report showed in this week’s Tech Roundup, a growing number of fintechs and banks are offering international digital accounts to Brazilians – U.S. dollar or Euro-denominated accounts opened in Brazil that offer remittance services for individuals and companies that are cheaper and more convenient than traditional bank transfers, and allow customers to invest in foreign markets.
Brazil’s new exchange rate framework, which came into effect in December, allows domestic financial institutions to host accounts in multiple currencies, rather than having to open branches in other countries to serve Brazilian customers.
More advantageous than credit cards, international digital accounts allow customers to withdraw local currency at ATMs, transfer funds with just a few clicks, and use linked debit cards at a much lower rate of IOF, Brazil’s financial transactions tax. Currently, international use of a credit or debit card linked to a Brazilian account accrues IOF of about 5.38 percent. However, if the transfer is between two accounts owned by the same person, the rate drops to 1.1 percent of the value of the transaction.
José Berenguer, CEO of Banco XP and responsible for digital banking services, told journalists that the company already has over 1 million clients investing abroad and that customers asked for the product. At first, only these customers will be offered the new international account. Gradually, the product will be offered to other XP customers.
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