Voice of the Industry

Open Banking and new FX regulation: two major movements for the Brazilian financial ecosystem

Tuesday 7 December 2021 09:05 CET | Editor: Raluca Constantinescu | Voice of the industry

Vinícius Vieira from Bexs Pay elaborates on the changes implemented by Banco Central do Brazil (BCB) that make transactions easier and create conditions for a more competitive market, mirroring the standards developed in the international scenario

2021 is being very busy and disruptive in the Brazilian financial ecosystem, with several innovations being developed and causing positive impacts on companies and people. In addition to the consolidation of instant payments (Pix), with more than 112 million unique users and surpassing in numbers the volume of transactions for boleto and bank transfers, some other changes are making the market more dynamic and competitive as we speak. 

The BCB, which is responsible for the creation and implementation of Pix, has also been working on an intense agenda related to other fronts, such as Open Banking, as well as the update of the foreign exchange regulation in Brazil, together with the National Monetary Council (CMN), much in line with G20’s priorities to the improvement of international payments in terms of costs, time, transparency, and access. 

Open Banking promotes inclusion and competitiveness 

Open Banking in Brazil completed its third phase of implementation at the end of October 2021 and has already taken several steps forward, such as easier access to information on financial services and related fees, making comparison much easier for the consumer. Customers can now also receive proposals for services related to their financial profiles, as long as they agree on sharing their registration and transactional data to be used for profiling and creation of personalised offers. Furthermore, they can also access an online environment, provide their data, and then access credit offers, financing, loans, etc. 

The fourth phase marks the beginning of the migration to Open Finance, offering a data sharing that allows access to differentiated services to a larger customer base, also making it possible to compare exchange rates, rates for financial assets, private pensions, and insurance, among others. The expectation is that increased competition among financial institutions will improve the user experience and reduce fees and interest charged to consumers. 

Payment initiator implemented within the scope of Open Banking 

The payment initiator, which started to operate in October 2021, works using the Pix infrastructure, allowing money transfers across multiple platforms, such as social networks, via ecommerce apps, without opening the bank application. WhatsApp, for example, was the first application released in Brazil to operate as a payment initiator. This functionality promises to make the payments process much faster and will likely decrease cart abandonment, as the user flow takes place within the same environment, with fewer distractions, redirections, and interferences. It is also expected that this new process will help social commerce grow. 

Brazilians will have a higher limit for international transactions, and new players are entering the foreign exchange market 

With the new exchange regulation, Brazilians now have a higher limit for non-declared international transactions, such as purchases of goods and services and remittances abroad, which were previously limited to BRL 10,000 (USD 1,769), and will now be equivalent to BRL 55,000 (USD 10,000 at the current exchange rate). This change also promotes cross-border transactions, with purchase power increasing and the decrease of possible charges for the declaration of transactions. In 2020 the cross-border ecommerce segment grew 76% in revenue, showing the eagerness of Brazilians for international purchases. 

These transactions are operated by a new figure created under the regulation called eFX, which are the exchange brokerage service providers. This makes the market more dynamic and allows new players, such as fintechs and payment institutions, to enter this business. The new standard made clear the field of activity and the obligations for the eFX service providers, which vary according to the authorisation level each company can obtain, bringing more security to new companies of this market. eFX service providers, by facilitating the payment methods to purchase goods and services abroad, will allow Brazilian consumers’ much wider access to the foreign market. 

From September 2022, payment institutions will also be able to request BCB a licence to operate foreign exchange at limits much higher than the current ones. Still, it is noteworthy that new entrants to the foreign exchange market must have a minimum operational structure to meet BCB’s requirements, highlighting the importance of a well-structured compliance area responsible for preventing money laundering, analysing and monitoring all parties involved in transactions to meet the regulator’s requirements. 

Boletos for international service transactions 

The new regulation also expanded the use of the Boleto, which will now be available also for international services and not just for the purchase of physical goods. This measure promotes more access to international services, as more foreign companies, through eFX service providers, will offer this payment method that still has a relevant share in the Brazilian payments space. 

The digital services vertical, which includes streaming, SaaS, among others, will benefit from this new rule, as they will be able to reach more Brazilians, especially the unbanked. According to BCB, in July 2021 alone more than 350 million transactions were processed using Boleto, showing the relevance of this payment method in the lives of Brazilians. 

FX transactions and payouts for payment accounts 

The payment account is a product that allows the customer to make transfers and payments using applications, whether within the same institution or between different institutions. These accounts offered by financial institutions are normally free. 

The new regulation allows payment accounts in Brazil and abroad to be directly connected to settlements of foreign exchange transactions, which is very inclusive. Previously, only current accounts in traditional banks in Brazil could settle foreign exchange transactions in reais (sell and buy currency). With this measure, we have added, in Brazil alone, more than 200 million payment accounts and hundreds of millions of other accounts around the world. 

This measure is also very positive in terms of payouts, as it facilitates the use of this product for people and companies in Brazil closer. 

Brazil matching international standards 

All these measures implemented promote competitiveness, the democratisation of financial services, with a market less concentrated on a few institutions, offering better rates and benefits to those involved in the ecosystem. Above all, now Brazil’s financial transactions reach the international standards of excellence, safely, agility, and accessibility. 

About Vinícius Vieira 

With over 10 years of experience with Global Payment Processing, Vinícius's fields of expertise include innovation in digital payments and fintech, global acquiring, multi-currency payment processing, cross-border payments in Brazil and Latin America, product and business development. At Bexs Pay, his main challenge is to lead commercial growth while bringing innovation and technology which, through payment transactions, facilitate access to global goods and services for Brazilians and the best of Brazilian goods and services for the world. 

About Bexs Pay 

Bexs Pay is a cross-border payment service provider for international businesses. Through our API platform, our solution provides a unique combination of online payments, mass payouts, and FX transactions for digital companies looking to process payments locally in Brazil, receiving or sending payments, without requiring a local entity. Our goal is to bring innovation and technology to facilitate, through a local payment processing, access to global goods and services for Brazilians, enabling international online businesses to reach more than 200 million people. Bexs Pay PSP platform is connected with Bexs Bank, allowing our partners to control FX in real time with no undesired outcomes on their settlements. Unlock the Brazilian market as a local player with Bexs Pay!

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: Bexs, FX , instant payments, PIX, Open Banking, cross-border ecommerce, payout, remittances
Categories: Payments & Commerce
Countries: Brazil
This article is part of category

Payments & Commerce