Central Bank regulates environment that enables contactless Pix and amends capital and equity rules for payment institutions

On August 02, 2024, the Central Bank of Brazil (“BC”) published BCB Resolutions No. 406 and No. 407, which regulate contactless Pix services. These resolutions introduce new rules detailing both the transaction with no redirection, the rules for participation, and the responsibilities of the institutions involved, as well as the new minimum share capital and net worth requirements for institutions that choose to offer this service.

This improvement significantly simplifies the process of initiating payments with Pix, reducing the number of steps involved in online payments. It also allows Pix to be offered in digital wallets, including contactless payments using near-field communication (“NFC”) technology.

According to BCB Resolution 406, the payment transaction initiation service will be shared, and there will be no need to redirect to the account’s linking and payment transaction stages. These steps include the client’s consent, given to a payment transaction initiating institution, to link an account held by the client or for which the client has transaction powers to a specific electronic device, as well as the client’s authentication and confirmation to initiate a payment transaction or a set of transactions.

It is worth noticing that institutions participating in sharing the payment transaction initiation service without redirection are responsible for the technological environments and electronic systems made available and for the records generated during the execution of the stages of linking the account and carrying out the payment transaction, including:

1. failure to comply with risk management measures provided for in the technical specifications and regulations in force; and
2. any failures in the payment transaction initiating institution’s procedures and controls to ensure the reliability, integrity, availability, security, and confidentiality of its electronic environments and systems that compromise the account-holding institution’s ability to authenticate the client.

Implementing the functionality will be mandatory:

1. as of November 14, 2024, for account-holding institutions belonging to conglomerates and cooperative systems in which 99% of the total number of payment transactions successfully carried out within the scope of Open Finance have been initiated, and
2. as of January 02, 2026, for other institutions holding mandatory participating accounts in Pix.

The Central Bank will publish a specific normative act to define the conditions and limits for carrying out the production testing stage, scheduled for November of 2024, with a comprehensive launch of the functionality in February 2025, providing for:

• amount limits for payment transactions;
• consent validity period;
• guidelines, conditions, and deadlines for carrying out tests, including in production, by participating institutions; and
• disclosure of the list of conglomerates and cooperative systems whose account-holding institutions must implement the sharing of payment transaction initiation services without mandatory redirection.

Finally, regarding contactless Pix, in addition to implementing the non-redirected transaction, institutions wishing to offer the service must implement communication mechanisms via NFC.

On the other hand, BCB Resolution No. 407 amends BCB Resolution No. 80 of March 25, 2021. It provides for the establishment and operation of payment institutions, specifies the standards for submitting applications for operating authorizations by these institutions, and establishes rules on the provision of payment services by other institutions authorized to operate.

BCB Resolution No. 407 introduces a new article 4-A to BCB Resolution No. 80 and determines that the payment institution that provides payment transaction initiation service can carry out such operations without redirection to other electronic environments or systems, including those of other institutions, as a special activity within the scope of Open Finance, subject to the provisions of specific regulations. Institutions interested in providing this service must notify the Central Bank of their intention 90 days in advance before initiating these activities.

As to the minimum capital and net worth requirements, BCB Resolution 407 introduced changes establishing the duty of payment institutions authorized to operate by the Central Bank to permanently maintain minimum paid-in capital and net worth limits of:

• BRL 2 million, for each of the modalities provided for in art. 3, head paragraph, items I to III of BCB Resolution No. 80;
• BRL 1 million, for the modality provided for in Article 3, head paragraph, item IV of BCB Resolution No. 80; and
• BRL 2 million, to carry out the special activity referred to in art. 4-A of BCB Resolution no. 80, and compliance with this condition is required for initiating the special activity.

Payment institutions operating under the terms of items I to IV must comply with the capital and net worth requirement as of January 01, 2026. Payment institutions that have applied for authorization to operate before the Central Bank by September 30, 2024, must immediately comply with the new capital and net worth requirements.

It is also worth noting that payment institutions that participate exclusively in closed-loop payment arrangements and provide services in the modalities set out in art. 3, head paragraph, items I and II, of BCB Resolution No. 80 must permanently comply with minimum paid-in capital and net worth limits of BRL 3 million.

Both BCB Resolutions No. 406 and No. 407 entered into force on their respective dates of publication.

Demarest’s Banking and Finance team is available to provide any further clarifications on the topic that may be necessary.