The beginning of Open Banking? Full Openness and Interoperability for Transfers through E-Wallets. A Review of Previous Measures.

On May 19, 2022, the Argentine Central Bank (the “BCRA”, after its acronym in Spanish) published Communique "A" 7514 (the "Communique") which completes the process of building an open and fully interoperable system for electronic transfers and payments by requiring that each digital wallet can manage the enrollment of accounts -bank or payment accounts- offered by other financial institutions or PSPCPs different from the e-wallet service provider.

The Communique emerges in a context of BCRA regulation on financial institutions and payment  service providers offering payments accounts (“PSPCP”, after its acronym in Spanish) that offer the service known as “digital wallet.”

Communique “A” 7363, dated September 10 of last year, had already established the possibility to connect an account (bank or payment) to initiate payments but without requiring enrolling other accounts offered by institutions different to the one providing the digital wallet service from which the payments are ordered. Some players in the e-wallet market were offering a certain degree of integration with payment instruments issued by another institution (such as credit cards) but not with bank or payment accounts.

The Communique amended the second paragraph of item 1 of the Communique “A” 7462 which established that the accounts to be debited for payments by transfers or other payment instruments may be provided by the same financial institution or PSPCP that provides the e-wallet service; and/or by other financial institutions or PSPCP where the digital wallet provider only performs the initiation function.

With the amendment introduced the underlined text is removed. This implies that to carry out payments through digital wallets the accounts to be debited may be those offered by other financial entities or PSPCPs, regardless of whether the digital wallet service provider also performs the account provision function. With Communique “A” 7462 this was possible exclusively when the digital wallet service provider performed the initiation function, i.e., sending of payment instructions at the request of an ordering client, without offering bank or payment accounts.  

Now, regarding the payment instrument that constitutes the immediate transfers, the BCRA stated that the transfer scheme administrators must implement the necessary mechanisms to make it possible:

1. To issue -from a bank or payment account- funds request (immediate transfers known as “pull”) that allow, by debiting the bank or payment account of the client receiving the request and after the latter has authorized it, the immediate accreditation of the funds in the requesting client´s account. 
2. Use the fund request regulated in section a) to make payments by transfer from accounts -bank or payment- that are not provided by the digital wallet service provider from which the payments are ordered.

Regarding the measure described in subsection a) and which implies that from a bank or payment account (ordering account of the request funds may be requested to be withdrawn from other bank or payment accounts (receiving account of the request) with the funds being debited from the receiving account and immediately accredited to the ordering account, the BCRA established that such authorization (issued by the client of the receiving account) may be granted only once, upon enrollment of the digital wallet account. The above authorization must comply with the fraud and security requirements set by Communique 7463  and may not be granted when the transaction is used for the charge of any concept related to loans.

Likewise, if the originator of the request is a human person, the authorization may only be granted when the account holder (or any of the co-holders) of the debited account is the same as the person sending the request, thus complying with the security standard imposed by the Argentine Central Bank that enforces account holder coincidence for linking payment instruments to e-wallets.

In addition to the liabilities for the payment schemes administrators, the BCRA established that financial institutions and PSPCPs must offer all the necessary functionalities to carry out successfully the immediate transfers of subsection a) above.

Moreover, the BCRA acknowledges the theoretical distinction of two subtypes of immediate transfers (apart from the special modality of payment by transfer with its two sub-modalities): immediate "push" transfers that involve sending funds and immediate "pull" transfers, which involve funds request.

The Communique established that the immediate debit payment service (“DEBIN” after its acronym in Spanish), used to implement in practice the “fund requests”, must consider both bank and payment accounts to enable ordering and/or receiving DEBIN. Therefore, payment accounts offered by PSPCPs are now included in this regulated instrument, since only bank accounts could previously be debited.

All these measures must be implemented by September 20, 2022.

Transfer 3.0 Program has been the cornerstone for interoperability in payments. Communique “A” 7514 continues the path towards an open system in the performance of financial institutions and PSPCPs under a single user interface or frontend and in the backend.

Nevertheless, to ensure full adoption of the open banking model by Argentina, as is the case in other countries, it is still necessary to implement an opening in the user’s transactional information among all the players (e-wallets and account providers), without unprotecting user’s personal data.