On July 4, the Central Bank of Brazil (BCB), together with the National Monetary Council (CMN), changed the rules for the operation of Open Finance in Brazil. The objectives are to simplify the sharing journey of payment transaction initiation services through Pix, expand and make the criteria for participation in Open Finance more flexible for its different sharing scopes, as well as to establish the definitive governance structure of Open Finance in Brazil.

Together with BCB Resolutions 398, 399 and 400 and BCB Normative Instructions 485 and 486, the publication of Joint Resolution 10/24 represents a relevant advance towards the regulatory objectives previously established by Joint Resolution 1/20. This movement is part of the set of actions that have been adopted by the Central Bank to boost Open Finance innovation in the country.

BCB's Regulation Board pointed these actions out as one of its regulatory priorities for 2024 in March. Some of them are presented below.

Payment journey without redirection and Pix by approximation

In a principled manner, the BCB admitted the sharing of payment transaction initiation services through Open Finance without redirecting it to other environments or electronic systems, subject to further regulation to be enacted regarding this matter.

This initiative seeks, mainly, the development of new payment functionalities and the improvement of the end user’s experience (UX) of those who wish to use payment transaction initiation services currently offered by the market.

As an example of new advances, there are:

  • the development of Pix by approximation (i.e., through near field communication– NFC technology), a feature that will allow end users to access Pix through digital wallets, after previous registration. These digital wallets are already offered by some market players for the registration of credit and debit cards and even of airline tickets; and
  • the ability for end users to complete payment for online purchases without having to access their transactional accounts or even without having to leave the purchase environments.

In a recent press conference, the BCB confirmed that this normative framework represents only the foundations of the normative development of the payment journey without redirection. A specific and detailed rule on the subject should be issued at the end of July.

New criteria for participation in Open Finance

As a result of Joint Resolution 10/24, regulators expanded the requirements to classify institutions as mandatory participants in Open Finance. They established that, in the context of data sharing, in addition to institutions participating in the S1 and S2 prudential segments, the following are also considered mandatory participants in Open Finance:

  • institutions belonging to conglomerates whose number of customers exceeds 5 million for two consecutive quarters (Article 6, item I, line "a"); and
  • other institutions members of prudential conglomerates that contain an institution that participates voluntarily in Open Finance (Article 6, paragraph 7).

According to the CMN 36/24 and BCB 93/24 votes released to the public, the aforementioned change is related to the fact that the last mandatory participation criteria for data sharing in Open Finance used to cover only approximately 51% of existing financial relationships.

The changes in Article 6, item I, line "a", and paragraphs 5 and 6 of Joint Resolution 1/20 will enter into force on January 1, 2025. On the other hand, the changes set forth in article 6, paragraph 7, of the same joint resolution will enter into force on July 1, 2025.

Furthermore, other institutions members of prudential conglomerates that contain a voluntary participating institution in Open Finance must also adhere to Open Finance. For these institutions, the changes will come into force in July 2025.

In the case of the participation criteria for sharing payment transaction initiation services, the BCB softened the rule by establishing that solely the following institutions must participate in Open Finance for the purpose of such sharing:

  • mandatory participating institutions of Pix;
  • institutions that hold accounts that integrate conglomerates that have mandatory participating institutions in Pix; and
  • institutions that provide payment transactions initiation services.

Previously, all institutions that offer tra nsactional accounts were required to participate in Open Finance in order to share payment transaction initiation services, subject to certain cases of waiver.

Definitive Open Finance Governance Structure

In accordance with the guidelines already set forth in paragraph 1 of article 44 of Joint Resolution 1/20 and with the provisions  of Circular 4,032/20 – which determined that the provisional governance structure of Open Finance should be replaced by a definitive structure – the BCB disclosed and regulated, through BCB Resolution 400/24, the definitive governance structure of Open Finance.

The definitive governance structure remains responsible for all the operationalization and implementation of Open Finance in Brazil. Among the innovation brought by BCB Resolution 400/24, the following stand out:

  • The funding of the Open Finance governance structure will be proportional to the participating institutions’ size, without double payment. The right to vote in the deliberations, at the instance of the governance body, will be proportional to the contribution to the cost of the structure of each participating institution, limited to 3%.
  • The governance structure will consist of three instances:
    • Governance Body – will be responsible for examining and approving accounts, amending the bylaws of the governance structure and dismissing members of the Executive Board and the Senior Management Body;
    • Higher Management Body – will absorb executive attributions, such as approval of proposals on technological standards, operational procedures, budget, election of management members, etc.; and
    • Board of Directors – will be responsible for managing and administering the governance structure of Open Finance, among other functions.
  • The new governance structure of Open Finance will now have a senior management body with two independent members instead of just one. It will also have two new entities representing the participants: Associação de Fintechs Zetta and Associação dos Iniciadores de Transação de Pagamento (Init), as informed by the Central Bank in its recent press conference.

BCB Resolution 400/24 entered into force on the date of its publication, with the exception of article 15, which revokes Circular 4,032/20, and will enter into force on January 2, 2025.