RIO DE JANEIRO, BRAZIL – Financial institutions with over 500,000 active accounts will be required to offer an instant payment system to their clients, which will be introduced in November. The decision was announced in a circular letter issued yesterday, February 18th, by the Central Bank (CB).
This requirement includes cash deposit accounts, savings deposit accounts and prepaid payment accounts of financial institutions. The circular letter further stipulates that institutions must offer clients all the initiation and payment receipt functionalities of the new tool.
In its testing stage, the instant payment system will allow money transfers in only 10 seconds and will operate 24 hours a day. The tool will be used by both traditional retail banks and new types of payment institutions, such as Fintechs, the type of institution that works with accounts and digital wallets. According to the Central Bank, the new system will reduce costs and increase competition, as it will be open to any institution.
Currently, the two most used transfer methods between different institutions, the Wire Transfer (called TED) and the Payment Order Document (called DOC) have time restrictions and take from 30 minutes to two hours to be completed. Even debit card payment does not produce credit to a storekeeper’s account instantly.
The Central Bank also announced it has signed a technical cooperation agreement with the National Treasury for Brazilian residens to use instant payments to pay their federal government taxes. According to the Central Bank, the settlement of obligations with the federal government will be made simpler and faster, improving the current experience.
Source: Agência Brasil