Brazil’s central bank has adjusted the country’s timeline for the introduction of open banking, postponing the third phase of the high-profile initiative’s four-phase rollout.
Open banking aims to boost competition by enabling third parties, such as fintech companies, to use customers’ financial data (with their permission) to develop new apps and services.
The Banco Central do Brasil (BCB) announced the two-month delay in a press release [Portuguese language], saying it was ‘in response to a request from the Open Banking Governance Structure’. Initially scheduled for 30 August, the BCB has moved the starting date of the third phase, which enables consumers to share data, to 29 October.
The request made to the BCB arose from the need for adjustments in technical specifications, the central bank explained. These adjustments ‘compromised the deadline for carrying out tests for the certification’ of participating institutions.
The BCB went on to say that it was reinforcing ‘its commitment in order for open banking to achieve its objectives of greater competition, efficiency in the financial system and financial inclusion of the population, remaining vigilant in the implementation process’.
Not the first postponement
Brazil’s open banking project is among numerous state-backed initiatives in the country to promote structural change across the financial sector to keep pace with, and capitalise on, technological advances. These include the launch of state-run instant payments system ‘Pix’ as well as the creation of a regulatory sandbox.
The central bank published the fundamental requirements for the implementation of open banking in April 2019. But since then, the project has been hit by a couple of hold-ups.
After a delay caused by the Covid-19 pandemic, the project launched in February this year, when financial institutions were mandated to share data about products, service channels, services and branch locations.
The second phase of open banking’s rollout involved sharing customer registration and transaction data. It was pushed back from 15 July to 13 August because participating institutions were ‘finalising the tests to obtain certifications for approval and registration of their APIs’, the BCB explained at the time.
New Pix rules amid kidnappings
In the third stage of the rollout, services should to be able to be shared, introducing the ability to pay bills and make money transfers outside a customer’s normal bank environment. “It is a time when there is a combination of open banking and Pix,” the central bank’s regulation director, Otávio Damaso, said in February.
Pix transactions are initiated through either what is described as an ‘alias’ (effectively a personal code that looks similar to a zip-code) or by a QR (Quick Response) code, BCB said as it announced the rollout last November. The central bank described the scheme as an ‘instant, low-cost, safe and intuitive’ means of payment.
However, on 27 August the BCB announced new security rules for Pix following a series of ‘lightning kidnappings’ where citizens were grabbed off the streets and forced to make cash transfers in order to be released. The BCB’s measures include a BRL 1000 (about £140) transfer limit between individuals between 8pm and 6am, a minimum wait-time to increase transfer limits, and the ability to set different transactional limits for daytime and nighttime, when kidnappings are more common.
In the final phase of Brazil’s open banking implementation, scheduled for 15 December, other financial products and services such as insurance, pensions and investments are due to be integrated into the open banking infrastructure.
*** Elsewhere in the Americas, El Salvador this week implemented a law that means businesses must accept the cryptocurrency Bitcoin as payment.
The government in the country, which has a population of about six-and-a-half million people, is to pay $30 of bitcoin bonus to citizens who download the ‘Chivo’ digital wallet.
The nation’s president, Nayib Bukele, is an enthusiastic cryptocurrency supporter.
Global Government Fintech’s dedicated open banking / open finance section
‘Russia open banking rollout picks up pace’ – our multi-part news story (23 July 2021) that included coverage of Brazil’s central bank pushing back the second implementation phase of open banking
‘Brazil central bank launches instant payments system ‘Pix’” – our news story (18 November 2020) on the BCB presenting Pix
‘Brazil ready to launch fintech sandbox’ – our news story (9 November 2020) on the BCB and the country’s National Monetary Council (CMN) having announed the guidelines for the operation of a ‘controlled tests environment for financial and payment innovations’