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Open banking is transforming financial ecosystems all over the world. Since the European directive on digital payment services (PSD2) came into force on 2018, Europe has seen benefits for customers and businesses alike. Consumers have been given more control over the data and access to third party service providers, while businesses have benefited from lower costs and improved services. As a result, many other countries around the world are now introducing measures that will see their banking systems open up to new competition from fintechs. Right now, all eyes are on Brazil and Turkey both of which have passed legislation to participate in the open banking revolution.
This digitization and transparency in banking services will open the market to a raft of new arrivals, including Nium, which is looking forward to making it cheaper and easier than ever to facilitate financial transactions domestically, as well as internationally, in both jurisdictions.
Brazil opens up to competition
For years, there’s been very little competition for the four main banking institutions in Brazil. As a result, banking charges have remained among the highest in the world. But all of that is now set to change. In May of 2020, the Central Bank of Brazil announced that they would go ahead with Open Banking. This means that registered financial institutions are now obligated to share customer data with third parties. Full implementation is expected by October 2021.
Already, this year, Brazil is seeing a vastly accelerated uptake in digital banking due to the Covid-19 crisis. Around three-quarters of all transactions took place via Internet and mobile banking channels, while transactions carried out in banks declined since March. All of this has created the ideal environment for companies such as Nium to enter the market with a low-cost and fast alternative solution for making/receiving payments and transferring money overseas.
Through Nium’s partnership with Banco Rendimento in Brazil, customers will now have access to seamless and efficient international payment solutions, coupled with prompt, courteous and highly responsive customer service. Currently, Banco Rendimento offers bank transfers to several other banks, however, thanks to Nium’s extensive network of banking partners that will be extended to include most banks in Brazil.
More convenience and flexibility
Crucially, for customers, all types of P2P, B2P, B2B and P2B financial interactions can now be processed with a single transaction limit of up to 12,000 Brazilian Real (BRL). Transaction limits of up to 50,000 BRL will be implemented on the total amount transferred over a defined period, depending on whether the customer is a recipient or a sender. If documentation (picture ID and proof of address) is provided, this can be increased to as much as 100,000 BRL annually.
While payments will go through the Brazilian clearing system (SPB), these will be greatly accelerated due to the Nium network compared to current clearing restrictions. Most transactions will be completed the same day, if initiated before 3pm.
As with all our services, we are committed to client confidentiality. Our technology ensures that Nium has no record or visibility on beneficiary details. Furthermore, unlike the current system, operated by payments platform, Dlocal, proof of payment can be obtained from the bank on request. It all adds up to a more convenient and flexible service for customers.
Turkish consumers to benefit also
Turkey, like Brazil, passed legislation towards the end of 2019 paving the way for the introduction of open banking and full compliance with PSD2 (Payments Service Directive), as set out in EU law – even though it is not a member of the EU. Turkey’s banks already have close partnerships with other banks in Europe, so implementing open banking makes a lot of sense when it comes to strengthening existing cross-border partnerships.
The benefits for customers will be significant. Transactions of up to 60,000 Turkish Lira can now be processed and paid in real time between 8.30am and 4.30pm (local time). Transactions after 4.30pm will be processed the following day. All payments will go through the standard Turkish clearing system, managed by the Central Bank of the Republic of Turkey (CBRT).
All of this demonstrates Nium’s commitment to offering our customers access to more markets around the world when it comes to making and receiving payments faster – and providing innovative services that make our customers lives easier.