(Adds more details from analyst meeting)
By Carolina Mandl
SAO PAULO, Sept 18 (Reuters) - Brazil’s largest payment processor, Cielo SA, will partner with wireless carriers Claro and TIM Participacoes SA to sell a new mobile phone that also functions as credit and debit card reader, a company executive said on Tuesday.
Cielo is aiming its smartphone device at small merchants and service providers such as taxi drivers, a market dominated by PagSeguro Digital Ltda.
Buyers of Cielo’s smartphone, dubbed Lio+, will not, however, be limited to Claro and TIM’s networks. They will be able to use any mobile carrier’s network for the payments enabled smartphone, which will be sold under the local Quantum brand and use an Android operating system, Cielo Executive Vice President Danilo Caffaro said.
Claro is the local brand of Mexico’s America Movil SAB de CV and TIM Participacoes is the Brazilian unit of Telecom Italia SpA.
Caffaro said in a meeting with analysts that the card processor will not subsidize mobile phone prices to boost demand for device and declined to provide any estimate on potential sales.
Cielo already sells card machine readers to small merchants, through its Stelo subsidiary.
The company hopes to use the smartphone as a platform to sell additional products and services, Caffaro said, thereby boosting margins.
Merchants using Lio+ will pay higher than average transaction fees after one year of use, according to the company’s price list.
On Tuesday, Cielo also launched a payment system in partnership with banks including Banco Bradesco SA and Banco do Brasil SA, among others, that uses quick response bar codes, known as QR codes, allowing smartphone owners to pay for goods and services by scanning the bar codes.
Caffaro said Cielo’s card reader machines are already available to process payments through the QR system, although they still need an update. Initially, the QR system will take only credit card payments.
Shares of Cielo were down 2.9 percent in afternoon trading, at 13.78 reais, underperforming Brazil’s benchmark Bovespa index. (Reporting by Carolina Mandl; Editing by Steve Orlofsky)