Company: DLO
Filing Date: 2025-04-24
Form Type: 20-F
Source: 0000950170-25-058197
Chunk: 140

Company: dLocal Ltd
Filing Date: 2025-04-24
Form: 20-F
Item: Item 16K
Chunk 140
---
 revenues

The Group recognizes fees charged to merchants as transaction revenue and fees incurred in processing payments as cost of services. Fees earned from merchants are presented as gross revenue due to the following considerations which indicate that the Group controls the payment processing services and acts as the principal:

• The Group bears primary responsibility to merchants for the fulfillment of the payment service;

• The Group contracts directly with merchants and there is no contractual relationship between merchants and payment processors (i. e., the service providers);

• The Group has independently negotiated arrangements with payment processors;

• The established fees are independent of the costs incurred from payment processors and the Group, therefore, has full margin risk for each transaction;

• In cross-border transactions, the Group or the merchants may bear foreign exchange risk depending on each agreement. The foreign exchange fees charged to merchants are based on a fixed fee per transaction or fixed percentage of the transaction value. When the Group bears the foreign exchange risk, it runs from the time the transaction in local currency is authorized until the Group converts the money to foreign currency (USD or EUR for pay-ins) and from the time the Group receives the money from the merchant until the Group converts the money to local currency (for pay-outs);

• The Group bears credit risk from the agents and third-party processors, acquirers and collection entities for the payment settlement. These processors collect funds from the end consumers’ financial institutions and are required to pay the proceeds from these transactions. dLocal is not insured against credit losses. If a processor or acquirer becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to pay amounts owed to dLocal when due, dLocal must nonetheless process the payment transaction for the benefit of merchants and end consumers. Merchants are liable for any charges properly reversed by the card issuer on behalf of the cardholder.

Transaction revenues are recognized as revenue at a point in time when an authorized payment transaction is processed.

Transaction revenues are those that are directly related to the volume of payments processes in dollars or in quantity of transactions.

Transaction revenues are comprised of:

• Processing fees: based on a percentage or fixed fee per approved transaction;

• Installment and advances fees: corresponds to fees applied to those transactions created with installments, which can be applied to the merchant or to the end users and fees associated with advances granted to the merchant;

• Foreign Exchange Fees: in cross-border transactions, a spread is applied to the exchange rate used for the currency conversion and can be based on a percentage or fixed fee;

• Other transactional fees: mainly correspond to fees charged