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IOF – Transaction Tax

IOF is a tax charged on financial transactions such as operations involving:

  • Credit
  • Exchange operations
  • Transactions concerning foreign currency and in insurance operations.

The tax is paid for by insured legal entities and private individuals in security operations and by those who acquire security and financial institutions. The tax ranges from 0.38% to 25%

Boleto Bancário

Boleto Bancário is the most popular solution for invoice payments in Brazil. Boleto Bancário is closely related to the Sistema de Pagamentos Brasileiro (Brazilian Payment System) also known as SPB. 

Sistema de Pagamentos Brasileiro is a set of procedures, rules, instruments and integrated operations that electronically support financial transactions between economic agents and the Brazilian market. It aims protection against leaks and against the breakdown of financial institutions. 

Its main task is to allow the transference of financial resources, the processing and the payments liquidation for private people, legal entities and governmental institutions. 

What is Boleto Bancário?

Boleto Bancário is a financial document, a sort of proforma invoice issued by a bank that enables your client to pay the exact specified amount to the receiving party (merchant). As long as within the due date period, your client may use a lotto house, supermarkets, post offices, home banking in addition to any bank agency in the Brazilian territory.

The main characters involved in this billing are the Bank, the Merchant and the Merchant's Client, or "sacado". 

  • Bank -Financial institution responsible for the issuing and collection based on agreement between the merchant and itself. The bank, once authorized to collect payment for the Merchant, will credit the amount owed by the Client in the Merchant's bank account.
  • Sacado (Client) -The individual or corporate entity that pays the boleto.
  • Cedente (Merchant) -The individual or corporate entity that issues the boleto and whose account will be credited.

How is a Boleto Bancário issued?

Anyone who has a bank account can issue a boleto bancário trough their bank, but here are some aspects that you must keep in mind in order to get started: 

  • Your bank will have to authorise your account to issue boleto bancário.
  • Banks have different pricing schemes so you will have to choose one that matches the volume you plan to issue
  • Some banks have very strict policies for individuals that want to issue boleto bancário.

Types of Collection

Some banks allow its costumers to choose from two types of collection: registered and unregistered. 

  • Registered collection- This consists on sending billing information beforehand to the bank through collect commands file of several types (the most common are CNAB and/or FEBRABAN) in order to enable additional services such as printing and mailing of boletos, reporting tools, control of collection, payment status, and alterations.
  • Unregistered collection - This entails the receipt of bills without previous registration of these in the banking system, which means that the bank will receive the payments due, credit the appropriate account and deduct any bank collecting fees. The Merchant can issue their own boletos specifying bank and any other information they deem necessary. The bank will by means of magnetic archives, files or other, transmit bill and payment information to the Merchant.

How to pay?

The payment process for Boleto Bancário transactions is similar to many other payment methods. It is a consumer lead payment, which relies on the consumer to initialise the payment action. 

One difference between cash payments is that with Boleto Bancário, consumers may also pay with their online banking. Once the payment is made, a payment confirmation is provided in real-time, while the funding can take an additional period of time.

There is no built in logic for direct debit or recurring payments in the boleto bancário scheme.

Overdue rules

When paid after the due date period, the client will have to pay a fee that increases daily and its value varies from bank to bank.

Besides the fee, after the due date the client can only pay the boleto at the bank that issued it, losing the option of paying it at the post office, lottery houses or any other facility. 

Fees involved

Banks charge a fee for every boleto payed by the client. This fee varies from BRL 1,00 to BRL 12,00, depending on the bank. If the collecting is registered, then the bank will also charge a fee for every issued boleto, regardless of whether it was paid or not. Therefore, unregistered collection is more suitable for online transactions. 

A client with a higher volume of banking transactions, who has been working with the bank for a while, will be eligible for lower fees or even fee exemption. It is important to consult your bank about the fees involved.

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