Brazil‘s Central Bank has kicked off the third phase of open banking on Friday (29). In this phase, the open banking data sharing ecosystem is integrated with PIX (the Brazilian instant payment system). This means that users will be able to make a payment or a transfer through PIX, using platforms other than the bank where they have an account.
Also starting to operate in the Brazilian open banking ecosystem the payment initiators, i.e. companies regulated by the Central Bank that can initiate payments and transfers for customers without necessarily offering bank accounts or accessing them. To operate as a payment initiator, it is necessary to apply for authorization from the Central Bank – both banks and technology companies, for example, can be payment initiators, as long as they are authorized by the Central Bank.
In July, the Central Bank announced that payment initiator companies could integrate with PIX.
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Thus, with the integration between payment initiators and PIX and the entry of both into the open banking ecosystem, it will be possible, for example, to buy something at the delivery app iFood and pay with PIX without having to leave the app to paste the QR code into the bank’s app (an example considering that iFood could obtain the PIX payment initiator license).
In short, with the payment initiator, it will no longer be necessary to log into the financial institution’s app to make PIX transactions.
“This payment initiator phase is great for the consumer because they can manage their bank account (initially via PIX) using other platforms, not just their bank platform. It is more convenient to make a payment or transfer. It is positive for financial and payment institutions as well, as they will be able to consolidate all their customers’ transactions on one platform,” said Thiago Alvarez, director of open banking at PicPay.
PIX payments within the e-commerce app itself
Brazilians who pay on e-commerce sites and apps today using PIX need to exit the shop’s app, open the financial institution’s app and do the process of pasting the QR Code link, for example. All of this takes seven steps.
With the payment initiator, the Central Bank wants to reduce friction and cut down the payment steps to just three. This will enable the e-commerce shop itself to be a payment initiator to complete the PIX transaction within the app. It also creates more retention for merchants and fewer chances of the user giving up the transaction midway through the process. The merchant will also be able to partner with a payment initiator company.
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Brazilian open banking phases
Brazilian open banking started to be implemented by the Central Bank in February this year. In the first phase, participating institutions shared their data through the APIs integration. It was from the second phase, which started in August, that customers began sharing their banking data with other institutions and fintechs.
In phase three, all institutions that operate accounts and all institutions authorized to operate as payment initiators will necessarily join open banking.
The fourth phase of open banking is scheduled to begin on December 15, with the exchange of information between institutions on financial products such as exchange, investments, pension plans and insurance.
