Credit unions will be able to offer digital wallet and card to members

The National Monetary Council (CMN) approved a norm, at its ordinary meeting on Thursday, 24th, which delimits the performance of credit cooperatives in the provision of payment services to members and non-members, according to a note published by the Central Bank in this Friday the 25th.

Exclusively for members, cooperatives will be able to offer digital wallets (issuer of electronic money) and issue credit cards (issuer of postpaid payment instrument). For the general public, they will also be able to provide payment services in the form of acquirer and payment transaction initiator.

The resolution also improves assistance and financial support provided by the guarantee fund, made up of credit unions, with mandatory membership by specific regulations issued by the National Monetary Council, says the BC.

In addition, the CMN homogenized terms, concepts and language, as well as eliminated ambiguities and duplication of commands with a view to improving the regulation of cooperatives. There was also the incorporation of specific changes deemed necessary to improve the harmonization and application of its provisions, such as operations and authorized activities, corporate governance and independent auditing.

Requirements applicable to the collection and application, by credit cooperatives, of funds from municipalities, their bodies or entities and companies controlled by them were also added.

New law

With the new cooperative law approved this year, BC highlights that credit cooperatives will have access to new tools to make more products available to their members, improve their governance and organizational structure. “Certainly, they will occupy more space in the financial market, increasing competitiveness in the National Financial System.”

credit fintechs

The CMN also approved a rule that allows credit fintechs to also operate as payment transaction initiators, a tool created in the third phase of Open Finance.

The payment initiator today allows financial operations to be carried out without having to enter the application of the institution from which the funds will come out, whether in online commerce or in another bank, for example.

“This improvement is of a complementary nature to the activities of credit fintechs and, for the Central Bank, it has the potential to promote innovations in the National Financial System (SFN) and to increase competition between agents authorized to provide this service, in addition to bringing the necessary legal security for entities in the sector and have strong synergy with Pix ”, justified the Central Bank in a note.

Credit fintechs have been authorized and regulated by the Central Bank since 2018. There are two types: Direct Credit Societies (SCD), which make loans with their own capital, and Loan Societies between People (SEP), which intermediate the operation of financial resources from creditors to debtors. Currently, BC has already authorized the operation of 93 SCDs and 10 SEPs.

RWASP

The CMN also approved the creation of a portion relating to the calculation of the capital required for risks associated with payment services (RWASP) for Type 1 conglomerates classified in segments S2 to S5, according to the note published by the Central Bank regarding its votes at the ordinary meeting of the council on Thursday.

The Type 1 conglomerate is the one led by a financial institution and integrated by a payment institution, according to the new regulations created by the BC in March of this year. Last week, BC postponed the validity of the rules from January 1 to July 1, 2023.

The main change in the rules created in March was the prudential update of payment institutions, so that the requirements charged are aligned with the risks they represent for the financial system. The IPs most affected are those that constitute a conglomerate integrated by a financial institution, called Type 3.

According to the BC note this Friday, with the new CMN regulation, Type 1 and Type 3 conglomerates are subject to the same rules for calculating the minimum capital requirement. The RWASP portion encompasses the activities of accreditation, issuance of electronic money and initiation of payment transactions. Conglomerates classified in S1 (of greater systemic importance) are not subject to such portion and will continue to follow the Basel regulatory standard.

At the CMN meeting on Thursday, the BC also approved a resolution that establishes the risk and capital management structure and the policy for disclosing information for prudential conglomerates classified as Type 3 in the S2, S3 or S4 segments, “continuing the improvement of the prudential framework” of IPs.

Today, the conglomerate’s leading payment institution is subject to the requirements established in Circular nº 3681, while the subsidiary financial institution is subject to the commands of Resolution nº 4557. “The new regulation will apply to the conglomerate and covers the commands present in the two risk management rules mentioned, bringing greater efficiency and security in the risk management of this type of conglomerate.”

Also according to the BC, the circulars and resolutions that establish the methodology for calculating the portions of risk-weighted assets for credit, market and operational risks for their application to Type 3 conglomerates were also adjusted. BCB Resolution No. 200 already established that these conglomerates were subject to such installments, but it was necessary to adjust the wording of the circulars to make it clear that the regulations also apply to Type 3 conglomerates.