Mastercard offers Brazilian acquirers 50% payout and services in Will Bank dispute

Mastercard is trying to settle part of the fallout from the collapse of Will Financeira, also known as Will Bank, by offering Brazilian merchant acquirers half of the amount they say they are owed, plus services such as fraud protection for multiple years. For PSPs and acquirers, the real issue is not just the cash number: it is who eats losses when a card issuer collapses and the network says the rules changed after the fact.

1. Bloomberg reported on Friday, Aug. 14, citing unnamed sources, that Mastercard is proposing to pay half the amount demanded by Brazilian merchant acquirers affected by the collapse of Will Financeira, a FinTech tied to the failed Banco Master.
2. Alongside the cash offer, Mastercard is proposing to provide services including fraud protection for multiple years. The offer follows an earlier proposal Mastercard made in the wake of the Will Bank collapse.
3. 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,” and added that it is waiting for another transfer from the liquidator. “That settlement will happen once when those outstanding funds are received from the liquidator.”
4. The January collapse of Will Bank left Mastercard on the hook for about $950 million owed to other parts of the network, according to the report. Mastercard settled about half that amount, but has been disputing the other half with the acquirers.
5. Mastercard said it was required to pay bills due the month after Will Bank’s liquidation, while acquirers argued it is responsible for the full amount. In November, Brazil’s central bank halted Banco Master’s operations and named a liquidator; police arrested the bank’s controlling shareholder the same day.

Banco Master had been under liquidity pressure for months after growing rapidly by selling high-yield debt through investment platforms. In May, Mastercard was reported to be asking some of Brazil’s largest payment processors to cover half the cost of losses from Banco Master and Will Bank, which issued cards on Mastercard’s network. Brazil’s central bank had also adopted new rules making payment networks responsible for ensuring payment of all transactions to the receiving user, but Mastercard told merchant acquirers it should not be bound by those rules in the Will Bank case because the FinTech collapsed in January and card firms had until May to adapt.