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Redecard secures court injunction against StoneCo for alleged defamation

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Redecard secures court injunction against StoneCo for alleged defamation

Redecard SA secured a court injunction in the Sao Paulo justice that prevents its rival StoneCo Ltd. from badmouthing competitors to its clients, Estado de. S Paulo reported.

The card-processor unit of Itaú Unibanco Holding SA reportedly demanded that StoneCo immediately cease "the flagrant acts of unfair competition" which allegedly include "spreading false information" to discourage merchants from leaving its own network, and switching to Redecard.

According to the newspaper, StoneCo representatives have incurred in "direct mentions" of Redecard during phone calls with clients who want to cancel their subscriptions.

Competition between market players in Brazil has escalated sharply since Redecard jolted the industry in early 2019 with its zero-rate call. Aimed at gaining market share, it decided to both cut rates to zero for SMEs and to reduce the repayment timeframe for its clients to just two days from an industry standard of a month.

The move by Itau's player in the payment business spurred an administrative investigation into the sector by anti-competition watchdog Cade, as well as harsh criticism from its competitors. StoneCo's President Augusto Lins had issued a highly critical statement in which he described Redecard's move as an "anti-competitive act aimed at destroying fintechs and inhibiting competition" in the card payments market.

Redecard went as far as filing a lawsuit against the executive on defamation charges.

The recent injunction secured by Redecard signals yet another episode in what the Brazilian media labels as the "war of the little machines," in reference to the point of sales devices that providers rent to merchants to conduct payment operations.